Samsung Electronics has reported a smaller-than-expected working revenue for the second quarter as larger inflation damps shopper demand for cellphones and different digital devices.
The firm is bracing for waning demand in response to fast worth rises worldwide following the pandemic-driven surge within the tech sector over the previous two years.
Operating revenue for the world’s largest smartphone and reminiscence chipmaker was estimated at Won14.1tn ($10.73bn) within the April-June interval, up 12 per cent from a yr earlier.
It marked the corporate’s highest second-quarter revenue in 4 years however was decrease than a Won14.5tn forecast by Refinitiv SmartEstimate. Preliminary outcomes point out that gross sales are more likely to have elevated 22 per cent yr on yr to Won77.8tn.
Samsung shares have fallen round 25 per cent thus far this yr however gained 3.5 per cent on Thursday as long-term buyers went bargain-hunting within the perception that concern in regards to the sector’s dim outlook has already been priced in.
Shares in crosstown rival SK Hynix gained 1.74 per cent, whereas TSMC shares jumped greater than 5 per cent as Samsung’s agency quarterly earnings from the semiconductor enterprise eased some concern in regards to the looming downturn.
Analysts have not too long ago revised down the South Korean tech large’s earnings forecasts with shoppers and companies anticipated to cut back spending as the specter of a worldwide recession rises.
“The industry climate began to deteriorate from the mid-second quarter,” mentioned CW Chung, head of Korea analysis at Nomura. “Chip prices are likely to fall further in the second half, hit by economic recession.”
Chipmakers together with Intel, Micron Technology and Advanced Micro Devices have warned of the looming downturn after two years of sturdy gross sales.
Micron final week gave a surprisingly downbeat forecast for the present quarter, citing weak demand for smartphones and computer systems. It warned that the market had “weakened considerably in a very short period of time”. The US firm remained assured about long-term demand.
Last month, Intel mentioned the corporate would alter investments because the second-half outlook had develop into “a lot noisier” over the earlier month. AMD flagged a slowdown in PC gross sales this yr whereas Nvidia has slowed hiring due to falling demand associated to crypto mining and video video games.
“Semi downturns happen every three to four years, and we could be due for another one,” Bank of America analysts mentioned in a report final week.
Market researcher TrendForce mentioned costs of some DRam chips utilized in tech units and servers declined about 12 per cent final month from a yr earlier.
Samsung can also be dealing with concern over its weakening semiconductor competitiveness, particularly within the foundry enterprise, in keeping with analysts.
The firm final month started mass manufacturing of 3-nanometer chips, which are extra highly effective and environment friendly than predecessors, to tackle TSMC within the battle to dominate the excessive finish chip market.
Gartner forecast that international cell phone gross sales would fall 7.1 per cent this yr, citing inflation, the conflict in Ukraine and provide chain issues worsened by China’s Covid-19 lockdowns. The analysis firm expects worldwide private laptop shipments to drop by 9.5 per cent this yr.
“We believe it will take one to two quarters for the smartphone and PC customers to burn off the excess inventory before starting a rebuild,” Needham analysts wrote in a latest word.
Lee Min-hee, an analyst at BNK Securities, estimated that Samsung’s smartphone shipments had fallen about 16 per cent quarter on quarter to 62mn items within the second quarter.