Samsung Electronics has flagged its first revenue fall in practically three years in an indication of the deepening trade downturn as demand for digital units fades.
The world’s largest reminiscence chipmaker and smartphone producer on Friday estimated its working revenue for the three months to the top of September at Won10.8tn ($7.7bn), down 32 per cent from a yr earlier.
It was a lot decrease than the Bloomberg estimate of Won12.1tn and marked the primary decline in earnings since 2020. Sales got here in at Won76tn, up 3 per cent yr on yr.
The weaker-than-expected revenue steerage comes after US chipmaker Micron Technologies and Japan’s Kioxia Holdings reduce spending to counter a provide glut. Advanced Micro Devices, a US chipmaker, on Thursday reduce its third-quarter income estimate by about $1.1bn from its August forecast.
“The pace of falling demand for smartphones, PC and TVs is very fast because of the macroeconomic headwinds. And the pace of cutting chip orders is faster because of high inventories,” stated Choi Do-yeon, an analyst at Shinhan Securities.
But Samsung is just not contemplating a reminiscence chip manufacturing reduce but, an govt informed reporters within the US earlier this week.
The firm’s semiconductor enterprise head Kyung Kye-hyun expects the reminiscence market to stay sluggish till the top of subsequent yr. He just lately informed workers at an inner occasion that Samsung slashed its second-half chip gross sales steerage by 32 per cent from its April forecast, in line with the Korea Economic Daily.
The gloomy outlook has pushed Samsung shares about 30 per cent decrease up to now this yr. But Morgan Stanley this week upgraded the semiconductor sector, driving up shares of Samsung and SK Hynix on expectations of a market rebound within the second half of subsequent yr.
“The semiconductor industry has been rattled by the sudden inventory adjustment of customers amid growing anxiety over the economic outlook,” stated Park Yuak, an analyst at Kiwoom Securities. “Chip prices in the second half would be much lower than expected although the inventory adjustment is likely to be over by the first quarter of next year.”
Geopolitical dangers are one other space of concern for chipmakers. Washington is anticipated to announce new restrictions towards reminiscence chipmakers in China on Friday in a bid to curb Beijing’s technological advances.
However, the transfer might impression the Chinese operations of South Korean firms, analysts stated.
Samsung has a Nand flash reminiscence chip manufacturing facility within the metropolis of Xi’an whereas SK Hynix runs a Dram chip plant in Wuxi and a Nand plant in Dalian that it purchased from Intel two years in the past.
The South Korean firms have just lately introduced a sequence of offers to construct new factories within the US as a part of President Joe Biden’s Chips and Science Act.