Samsung Warns of Steep Declines in Q1 Sales, Profit
Published:2019-04-10 12:17:39    Text Size:【BIG】【MEDIUM】【SMALL

SAN FRANCISCO — Samsung Electronics is bracing investors for a dramatic decline in first-quarter sales and profit amid ongoing price declines in DRAM and NAND flash memory chips.

South Korea-based Samsung said Friday that it expects first-quarter sales to be about $45.8 billion, down about 14% compared to the first quarter of 2018. The company said that it expects to report a first-quarter profit of about $5.5 billion, a decline of 60% compared with the first quarter of last year.

Compared to the previous quarter, Samsung expects sales to be down about 12% and profit to be down about 42%.

Samsung will report its first-quarter financial results later this month. The company had already warned investors in January that sales and profit were likely to decline by double-digit percentages on weak demand for memory chips and display panels.

Samsung, the world’s largest memory chip supplier, rode the memory market boom to become the world’s top chip seller in 2017 and 2018. But conditions in the NAND flash market began to sour early last year, and near constant increases in DRAM average selling prices skidded to a halt late in 2018.

Analysts now expect that the end of the memory boom will cause Samsung to slip back to the No. 2 position in total semiconductor sales in 2019, with Intel returning to the top spot that it held from 1993 to 2016.

Acting AG Whitaker

DRAMeXchange, a Taiwan-based market research firm that tracks memory chip pricing, said last week that price declines for PC DRAM and mobile DRAM show no signs of abating. The firm said that the average selling price for DRAM decreased by more than 20% in the first quarter and is expected to continue falling well into the third quarter.

The outlook is slightly better in the NAND flash market. DRAMeXchange said that contract prices for NAND also declined by about 20% in the first quarter due to weak demand in the server market, extended smartphone replacement cycles, and slower-than-expected sales for Apple’s latest iPhone. But the firm expects NAND contract prices to decline only slightly in the second quarter as demand improves for smartphones, laptops, servers, and other products. Reductions in capital spending and production capacity by NAND suppliers will also help the supply-and-demand dynamics, according to DRAMeXchange.

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