SEOUL • Samsung Electronics Co Ltd said its first-quarter (1Q19) financial results will be lower than market estimates because of a slump in memorychip prices, a surprise profit warning ahead of preliminary results due early next month.
The prices for memory chips and displays fell more than expected, leading to the shortfall, the Suwon, South Korea-based company said in a statement yesterday. The company said it will use its resources to be price competitive in the market.
The warning from the world’s biggest chipmaker underscores a steeper than expected dive in memorychip prices amid a stagnant smartphone market. That’s been exacerbated by a global economic slowdown and the US-China trade tensions that have hit demand for semiconductors that account for the biggest portion of Samsung’s profits.
Prices for dynamic random- access memory slid almost 30% from the originally projected 25% in 1Q19, “resulting in the sharpest decline in a single season” since 2011, TrendForce said on March 5. Inventory levels also continued to rise after overal l contract prices dropped in 4Q18, according to the research firm.
Together with SK Hynix Inc and Micron Technology Inc, Samsung controls the bulk of the market for DRAM chips, used to store data on personal computers and servers. Samsung said in January 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. — Bloomberg