Samsung warned its profits may take a 32% hit this year due to the slowdown in memory chip sales, according to Reuters. The tech firm is expecting a total revenue of 2.5 trillion won this year, which would be equivalent to $2 billion USD, but the lack of demand has led them to cut forecasts.
How Samsung has been affected?
This is the third consecutive revision it’s been making. It’s down from an earlier forecast made in October, which projected 4 trillion won ($3.6 billion USD) in operating profit. Samsung has been affected by reduced demand for memory chips, a market that has been flooded by low-cost products from Chinese manufacturers, according to Reuters.
Reuters also mentioned that Samsung warned of a gap between supply and demand for DRAM chips in the first quarter of 2017, which is likely to cause average selling prices to drop 15% sequentially.
Current status of share market
Samsung Electronics Co Ltd (KRX:005930) shares are currently trading at 1,478,000 KRW ($1,315 USD), down -0.63 (-0.
This is just one example of how unpredictable the market can be and how quickly it can change, especially when it comes to semiconductor shares. Many people are now wondering what’s going on with the semiconductor industry and if it is really going into a “fourth industrial revolution.
How has it happened to Samsung?
A major shift in consumer behavior has led technology companies to change their focus away from consumer electronics, home appliances and cars.
A shift into the cloud can also be a factor in the decline. Consumer demand for smartphones and tablets has been outweighed by growth in data markets like cloud computing and artificial intelligence, which cut into profit margins for companies.
Recently, memory chip manufacturer Micron Technology Inc (NASDAQ:MU) reported a 13% drop in revenue with a net loss of $1.5 billion from the same quarter last year. This is likely due to major drops in demand and pricing issues that are expected to continue throughout 2017.
According to Lisa Su, CEO of AMD, “the PC [personal computer] market] declined dramatically in the quarter.”
On October 27, Samsung is scheduled to report its profits.
- US prohibits tech companies from constructing factories in China
- New China export regulations harm US chip manufacturers.
Samsung being the largest memory chip maker
Samsung is the world’s largest memory chip maker and continues to be profitable despite a slump in the market. They have cut their profit expectations by around 10% just a few weeks after the market’s big gains.
Samsung has been holding on to their number one position since the 1960s, but they’ve struggled with their memory chips division since last year. This is another example that semiconductor stocks are not as stable as people once thought.
Electronic device sales have suffered as a result of consumers being discouraged from making purchases due to growing prices, increased borrowing rates, and the impact of Russia’s invasion of Ukraine.
As a result, businesses that acquire memory chips, such those that make cellphones and personal computers, have had to reduce their purchases as they exhaust their current inventories.
According to technology industry analysts, memory chip prices will continue to decline over the next three months as smartphone sales continue to decline and demand is not anticipated to increase.
Samsung warned its profits may take a 32% hit this year due to the slowdown in memory chip sales. The tech firm is expecting a total revenue of 2.5 trillion won, which would be equivalent to $2 billion USD, but the lack of demand has led them to cut forecasts.
Read more at samsung warns 32 – Bing News