Samsung's profits dive amid memory chip market weakness
Samsung on Wednesday reported that its second quarter profits plunged on the back of lower memory chip prices, though overall figures were better than the guidance provided by the company earlier this month.
The tech giant, which is listed on the South Korean Kospi index, recorded an operating profit of 6.6 trn Korean won (£4.6bn) in the three months ended 30 June, a 56% drop from the same period a year beforehand.
The company posted a 4% drop in revenue to KRW 56.1 trillion, after its semiconductor business posted revenue of KRW 16.1 trillion and an operating profit of KRW 3.4 trillion for the quarter, a drop of almost 71% from the same period in 2018.
The declines were driven by continued weakness and price declines in the memory chip market as effects of inventory adjustments by major datacenter customers in previous quarters continued, though there was a limited recovery in demand.
However, the smartphone manufacturer said demand is expected to increase further in the second half of the year, though it added that volatility remains in the overall industry due to increased external uncertainties.
Difficulties facing the company include a potential trade spat between Seoul and Tokyo, with Japan having recently reduced its exports of industrial materials such as those required to manufacture semiconductors, and the delayed launch of its foldable smartphone following concerns regarding broken screens.
"The company is facing challenges from uncertainties not only in business areas but also from changes in the global macroeconomic environment. Samsung will, however, continue to invest in enhancing business capabilities and future technologies, including 5G, system semiconductors, artificial intelligence and automotive components, for longer-term growth," said Samsung.
Samsung's shares finished the session down 2.58% at 45,350.