Falling prices for memory chips and the weakening demand for its displays darken the prospects for the technology giant Samsung Electronics.
The first-quarter profit is therefore likely to lag behind market expectations, warned the South Korean company Samsung Electronics on Tuesday. Only a week ago, the industry leader in smartphones, televisions, and computer chips had promised that stagnating demand for memory chips and the churning global economic growth would weigh on business this year.
For January to March, analysts expect the operating result of the rival – and supplier – of Apple, a decrease of more than 50 percent to the equivalent of 5.6 billion euros, according to data from Definitive SmartEstimate. In terms of sales, the experts expect only 41.9 billion euros, after 47.3 billion euros in the same period last year. The prices for DRAM chips, which are mainly used in servers, according to experts, at the beginning of the year on average more than 20 percent.
In addition, weaker economic growth in China and trade disputes are clouding prospects. Also, the weakening smartphone business and declining investments for data centers burden the industry according to analysts. A week ago, after a difficult first half of the year, the technology giant had promised shareholders a better memory chip business in the second half of the year.