Samsung Electronics claimed on the 5th of July that the company expects operating profit to tumble as much as 56 percent for the second quarter of this year – a direct consequence of the weakening chip market. In recent years, the Korean manufacturer has enjoyed record profits however things have now taken a toll as chip prices are falling due to an increase in global supply that we have seen recently.
The trade war between both the US and China too has contributed to the recent events. Samsung earns a large amount of its revenue from there as demand tapers off and page of datacenter construction decelerates. And so one would have to place the situation surrounding Huawei at the center of this problem.
An analyst at HI Investment and Securities Co. said : “Memory prices are likely to keep sliding due to the ongoing trade war.” He further commented by saying that shipments should indeed be stable as Chinese customers who haven’t actually received products from chipmakers based in the US are more than likely to increase orders. Unfortunately enough, this isn’t good news for chipmakers.
It isn’t all bad news for Samsung though – as the company’s smartphone business could see a boost if the Huawei ban persists. HI Investment and Securities has made a prediction that Samsung might as well end up selling 37 million more smartphones a year. If this does end up being the case, one would have to imagine that some pressure will be taken off the other divisions too as they’ll use some of the chips from Samsung.