Poor memory chip sales caused lower than expected operating income and revenue for Samsung’s fourth 2018 quarter.
Samsung’s operating profit in these preliminary results was $9.6bn – 21 per cent less than consensus average forecast of expectation of $12.4bn.
Samsung operating profit was $15.9bn in the third quarter and the expected profit is almost 30 per cent lower than a year ago.
Samsung expects consolidated sales revenues for the quarter to be between $52.5bn and $54.3bn- 9.9 per cent worse than the $53.4bn mid-point estimate – and down from $58.4bn in Q3.
Analysts attribute the shortfall to poor DRAM sales in the smartphone, notebook, and PC markets, and strong competition for smartphones. It comes after Apple reported slumping iPhone sales in China. Apple is a large buyer of Samsung DRAM chips.
NAND sales have not been identified as contributing to Samsung’s revenue and profits slump.
Analyst fingers also point to the China-US trade tariff discussions as acontributing factor. Chinese state regulators have accused Samsung, SK Hynix and Micron of price-fixing DRAM and NAND chips.
Industry analysts think new Samsung smartphones and general server CPU upgrades will send DRAM demand upwards later this year. Even so, Samsung may have to cut prices.