On Friday, the chipmaker, Samsung Electronics was warned of a potential 60 per cent plunge in the first quarter operating profits in the face of a weakening market for chipmakers.
Operating profits for the months of January, February and March are expected to be “approximately 6.2 trillion won” said Samsung Electronics in a statement, which is 14 per cent lower.
Samsung’s flagship subsidiary is the largest of the Samsung group which is controlled by conglomerates that have a significant market share in South Korea, home to the world’s 11th largest economy, and is in turn crucial to the economy of the country.
While the company enjoyed large profits in the past despite various mishaps, chip prices are now beginning to fall as global supplies increase and demand weakens.
Last week, Samsung Electronics warned its investors of impending weak operating profits, deeming the market conditions “unfavorable” for memory chips and displays.
“Amid weak demand for memory business, a drop in price for signature products is expected. The company will seek to improve cost competitiveness through effective resource management while enhancing product quality in the short term,” it said.
On Friday, Samsung announced the launch of its new high-end smartphone S10 5G. This comes after South Korea won the global race in launching 5G for commercial use nationwide earlier this week..
According to Bloomberg News, the earnings estimate was lower than the forecasted amount of 6.9 trillion won which was supposed to represent the company’s lowest operating profits since 2016. This comes after the first reported fall in the quarterly profile for two years which was announced in January.
Despite this, Samsung’s shares went up by approximately 0.3 per cent in morning trade. Due to positive Chinese factory data and renewed optimism about China and the US’s trade negotiations, the market seems to have been kept afloat.
According to government findings, for the first time in six months, South Korean semiconductor exports increased in March.
Additionally, Samsung is due to release their latest innovation which is a bendable smartphone, the first of its kind- the Galaxy Fold.
Samsung’s final earnings report is expected to be released within the next few weeks and the firm has decided to keep its net profit and sector-by-sector data on business performance private until then.