Samsung Q2 profit falls 56% from chip downturn

Samsung is expecting operating profits of 6.5 trillion won for the second quarter, a drop of 56% from 14.87 trillion won a year ago caused by the downturn in its memory semiconductor business.

Samsung Galaxy S10 Plus

(Image: Samsung)

Samsung Electronics expects operating profits of 6.5 trillion won for the second quarter of 2019, the company said in its guidance.

It is a drop of 56% from last year's 14.87 trillion won in the same period. The significant drop is thought to be caused by the downturn in its memory semiconductor business.

Samsung clinched record profits last year due to unprecedented demand for DRAM and NAND Flashes but prices have dropped steeply due to inventory adjustments from clients since the fourth quarter of last year. DDR4 8GB was sold at $8.19 as of September last year and has since fallen to the $3.00 range, according to DRAMeXchange.

However, the company's chip business is still expected to contribute the lion's share of Samsung's profits.

See also: Samsung fixes Galaxy Fold's embarrassing screen flaws, so when's relaunch?

Its mobile business is also expected to have contribute around 2 trillion won thanks to the Galaxy S10 series, which includes a 5G model with a higher price tag. But the delay of the Galaxy Fold and the continued decline of the average sales price of smartphones is likely to put a dent on the chances for a drastic profit increase from the previous quarter.

The South Korean tech giant also noted in its guidance that the operating profit includes a "one-time gain related to the display business."

This is likely referring to the penalty Apple owes Samsung Display for not buying enough OLED panels that goes in to the former's smartphones.

Samsung is expected to announce its full fiscal report for the quarter at the end of the month.

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