Samsung Electronics Co Ltd said on Friday it was heading for its lowest quarterly profit in more than two years as a glut in memory chips, slowing panel sales and rising competition in smartphones hit margins, ONA reports citing Reuters.
The South Korean tech giant said first-quarter operating profit likely slid 60 percent from a year earlier, missing market expectations and putting it on track for its weakest quarterly profit since late 2016.
Shares in Samsung rose briefly before paring gains to trade flat following the guidance, as many investors are already looking ahead to an earnings recovery on the back an improvement in chip prices in the second half of the year.
Samsung supplies memory chips and screens for its own smartphones and Apple Inc, and server chips for cloud companies such as Amazon. Its semiconductor business is the main profit driver.
“In the second half, memory chip prices will have a soft landing, so falls will slow, and the release of new iPhones later seems like a good sign for Samsung’s display and memory chips,” said Kim Yang-jae, an analyst at KTB Investment and Securities.
The world’s biggest maker of smartphones and memory chips said in a filing January-March profit was likely 6.2 trillion won ($5.5 billion), missing the 6.8 trillion won estimate from analysts according to Refinitiv SmartEstimate.
Revenue likely fell 14 percent from a year earlier to 52 trillion won. The firm will disclose detailed earnings in late April.
Samsung shares were flat as of 0120 GMT, while the broader market up 0.2 percent.
The firm earlier had warned the quarter could be disappointing due to falls in memory prices, and slowing demand for display panels used in Apple’s iPhones.
Samsung’s premium Galaxy smartphones meanwhile are struggling to be profitable due to rising costs of innovation, competition from Chinese rivals and the reluctance of consumers to upgrade, analysts have said.