Samsung Electronics Co yesterday said its first-quarter results would fall short of market estimates as demand for memory chips waned, issuing a surprise profit warning ahead of preliminary earnings next month.
Prices for memory chips and displays fell more than expected, leading to the shortfall, the Suwon, South Korea-based company said in a statement.
The company, which has said it expects demand to pick up in the second half after customers work through their inventory, said that it would use its resources to maintain price competitiveness.
The warning from the world’s biggest chipmaker underscores a steeper-than-expected dive in component prices amid a stagnant smartphone market.
That is exacerbated by a global economic slowdown and US-China trade tensions that have hit demand for the semiconductors that account for most of Samsung’s profits.
Its shares fell less than 1 percent in Seoul trading. The stock had gained 18 percent this year through Monday’s close.
“Samsung’s trying to spread out the shock over its results,” said Song Myung-sup, an analyst at HI Investment & Securities Co. “Market watchers are bracing for a bad situation.”
Prices for dynamic random access memory (DRAM) slid almost 30 percent from the originally projected 25 percent in the first quarter, “resulting in the sharpest decline in a single season” since 2011, TrendForce said on March 5.
Inventory levels also continued to rise after overall contract prices dropped in the fourth quarter of last year, the research firm said.
Prices for computer memory have been hit by slower orders from data center owners, such as Amazon.com Inc and Alphabet Inc’s Google, which have accumulated stockpiles of unused parts.
PC shipments, another major end-use of memory chips, have also been limited by a shortage of processors from Intel Corp.
“Most DRAM suppliers are currently holding around a whopping six weeks’ worth of inventory,” TrendForce said. “The excessively high inventory will continue to cause down-corrections in prices this year if demand doesn’t make a strong comeback.”
Samsung competitors, such as Micron Technology Inc, have said that the current weakness is a low point for the memory industry and that, once the inventory has been worked through, demand and pricing would improve in the second half of this year.
Together with SK Hynix Inc and Micron, Samsung controls the bulk of the market for DRAM chips, used to store data on PCs and servers.
Samsung in January said that it was reducing spending this year to focus on the profitability of its memory operations after its net income slumped the most in two years.
Samsung usually provides an estimate of its revenue and operating profit days after each quarter ends. It then provides a full breakdown of its performance later in the same month, holding a conference call with investors.
“In the short term, the company will strengthen the differentiation of its products based on its technological leadership to improve the difficult business conditions, while seeking to improve the price competitiveness through efficient use of resources,” the company said in the statement.
Aside from its memorychip woes, Samsung has been struggling to stem a decline in its smartphone sales as consumers wait longer to upgrade their devices.
Its display division, which provides smartphone screens to Apple Inc, has also been hurt by lower-than-expected sales of iPhone devices and competition from Chinese makers of monitors and televisions.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last