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Samsung Electronics bets on better second-half after first-quarter profit slumps

Samsung Electronics bets on better second-half after first-quarter profit slumps

South Korea’s Samsung Electronics Co Ltd flagged improved second-half results on expectations of a pick up in memory chip and smartphone sales, after posting its weakest profit in more than two years in the first quarter.

The world’s top maker of semiconductors, however, warned of more short-term pain in the second quarter, with memory chip prices likely to decline further before a rebound in demand as data centers re-stock later in the year.

“For the second half of 2019, the company expects memory chip demand for high-density products to increase, but uncertainties in the external environment will persist,” the tech giant said in a statement.

Hit by falls in chip prices and slowing demand for display panels, Samsung posted operating profit of 6.2 trillion won ($5.4 billion) in the quarter ended March, smallest since late 2016 but in line with the company’s guidance.

Revenue fell 13.5 percent to 52.4 trillion won, also in line with its earlier estimates.

Samsung’s core semiconductor business booked a 64 percent fall in operating profit to 4.1 trillion won, while the display business logged 560 billion won in losses.

Memory chip makers have been hit by a downturn in the global smartphone market and a fall in demand from data centers behind cloud computing services amid a broader economic slowdown.