Samsung Limit Dull Sales Of 2019 With Chip Recovery In Store

Recently, Samsung Electronics announced it was expecting its largest annual profit drop in at least a decade.

Moreover, investors are counting on an anticipated uptick in the memory-chip market. Such an uptick could alleviate the tech giant’s misfortunes on the stock market this year.

According to Refinitiv SmartEstimate, when the firm issues first round of fourth-quarter results on January 8, the world’s leading maker of memory chips is to post a 40% slump.

The drop is mainly on the operating profit of about 6.48 trillion won ($5.56 billion). Also, it has weighted towards more steadily accurate analysts.

Last December, the quarter is likely to mark the South Korean firm’s fifth year-on-year decrease in quarterly profit. It has completed a year stained by inflated stockpiles of chips that squeezed prices.

Also, the U.S.-China trade war has shaken global supply chains and projections for consumer demand.

Meanwhile, 2018 has been a record year for earnings. Last year’s decline means Samsung published its largest percentage drop in annual profit in at least a decade.

On the flipside, the United States has been delaying the December tariffs on Chinese goods, containing mobile phones and laptops.

The concerns regarded demand easing as confidence for the rollout of new 5G networks around the world increased.

Anticipations of Overall Market Upturn

In a statement, Michael Yang, a director at IHS Markit, stated, “We expect an overall market recovery in the first quarter of 2020.”

He added, “Both solid demand forecast from the server/hyper-scale (infrastructure) customers and optimism around 5G smartphone adoption are the drivers for growth.”

However, analysts anticipate Samsung’s annual profit to surge nearly 40% in 2020.

The firm itself doesn’t usually issue full-year earnings estimations.

Despite 2019’s hard times for the world of chips, Samsung still produced half of its January-September profit from the industry.

The core strength, along with optimism for 2020, assisted Samsung’s shares to ride out shaky earnings to end last year.

It has ended with a 44% gain. It is higher than an 8% improvement for the Seoul benchmark index.

This year, many industry specialists recommended cautiousness regarding the strength of the recovery.

A director at S&P Global Ratings, Park Jun-hong, stated, “The chip market will rebound in 2020 from a low base last year, but it is premature to expect a boom (like that) seen in 2017.”

Elsewhere, Samsung, another world-leading maker of mobile phones, TVs and displays, echoes that caution.

The firm flagged last week what it stated would be a more challenging global economy this year.

Moreover, the damage was by the escalating political ambiguity and a possible slump in consumption.