Samsung flags smaller-than-expected fall in fourth quarter profit as chip price fall eases

Technology

FILE PHOTO: Samsung Electronic’s Galaxy A90 is seen on display at a Samsung store in Seoul, South Korea, November 14, 2019. REUTERS/Kim Hong-Ji

SEOUL (Reuters) – Samsung Electronics (005930.KS) flagged a smaller-than-expected fall in quarterly operating profit, indicating that memory chip prices bottomed out quicker than analysts had anticipated, strengthening hopes of a recovery.

The world’s top memory chip maker has struggled since late 2018 as a weak global economy curbed spending by data center customers and rising inventory of memory chips squeezed prices, ending a two-year industry boom.

But hopes for a rebound in chip prices are gaining momentum, and an expected easing in the U.S.-China trade war is lifting optimism that demand from servers and 5G smartphones customers will return this year.

Operating profit in the quarter ended Dec. 31 fell 34% to 7.1 trillion won ($6.09 billion) from 10.8 trillion won a year earlier. That came in ahead of the 6.5 trillion won forecast by Refinitiv SmartEstimate.

Samsung’s annual profit declined 53% to 27.7 trillion won, its lowest since 2015 and the biggest annual profit percentage drop in a decade.

Fourth-quarter revenue fell 0.5% to 59 trillion won.

Chip-price tracker DRAMeXchange said spot prices of DRAM chips – which provide devices with temporary workspace and allow them to multi-task – started to rebound in late 2019, and expected DRAM prices to stop falling in the first quarter.

Samsung Electronics is scheduled to disclose detailed results later this month.

Reporting by Hyunjoo Jin and Heekyong Yang; editing by Richard Pullin

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