That’s because shipments of memories to Huawei fell considerably in the period, which led to a backup in the supplies of DRAM and NAND chips, forcing the manufacturer to cut prices to move its stock.
Because Samsung is dependent on this segment – 67% of the company’s profit comes from the sale of chips – Huawei’s purchases directly influence Sammy’s performance in the quarter.
There is, however, a factor that balances the situation. If it was not good for the chip segment, the imbroglio between the US and Huawei caused the Chinese company’s smartphone sales to fall by 40% in the quarter. The Galaxy S10 line, which had strong sales in the period, may have been a good alternative for those who felt insecure about buying a Huawei model.
According to senior analyst HI Investment & Securities, Song Myung-sup, Samsung could sell up to 37 million additional smartphones per year if Huawei sanctions remain. Even with the truce given by Donald Trump, consumers outside China are still worried about the future of the Chinese manufacturer, especially in the relationship with Google and therefore Android.
A consensus among 29 analysts polled by Reuters estimates that Samsung will report a 60 percent drop in operating profits (earnings before interest and taxes) to 6 trillion won, or $ 5.14 billion, 66 billion in direct conversion) which, despite the great value, is not the end of the world for Samsung. That’s because, over the same period last year, Sammy’s profit was $ 12.7 billion,
According to TrendForce researcher Avril Wu, the price of DRAM chips probably will not return to the previous level by the end of the year. The consultancy says that the value of products fell 25% during the second quarter and predicts a drop of 15% or 20% during the current quarter, which runs through the end of September.
Micron Technologies, Samsung’s North American competitor in the memory chip industry, said demand for these chips is set to rise in the second half, which should push for firmer prices at the end of 2019. But TrendForce’s Wu says Samsung will not be able to clean up its DRAM chip inventory until the first half of next year, as well as being able to find problems to get important supplies needed to produce smartphone chips and monitors.
This is because the materials that the manufacturer imports from Japan to produce the parts (fluoride polyimide and hydrogen fluoride (HF) of high purity and strength) will require permission from the Japanese government from tomorrow (4), in a process that can last until 90 days.
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As for Huawei will use chips ahead is definitely a factor of oscillation in prices. When there are not many players who can buy chips instead of Huawei, Samsung needs to cut prices to sell them. ”
Jay Kim, analyst at Sangsangin Investment & Securities.
Source: www.phonearena.com