Samsung Electronics Co Ltd said chip sales should pick up next year after it reported on Thursday that third-quarter operating profit more than halved due to low prices of memory chips amid a prolonged industry downturn, reports Trend citing to Reuters.
Samsung said there were positive signs for the chip outlook thanks to anticipated demand from data-centre customers and the continuing expansion of 5G smartphones.
But the South Korean tech giant warned that prospects for semiconductor sales in 2020 were shrouded in uncertainty around the macroeconomic environment, a likely reference to the future of U.S.-China trade relations.
The result came after Samsung smartphone rival Apple Inc said holiday-quarter sales would beat Wall Street expectations, citing demand for services, wearables and its latest iPhones.
Samsung said operating profit was 7.8 trillion won ($6.7 billion), slightly above the 7.7 trillion won estimate the company released earlier. Revenue fell 5.3% to 62 trillion won, in line with its earlier estimates.
The semiconductor business - by far Samsung’s main source of income - reported operating profit or 3.1 trillion won, less than a quarter of its take in the same period last year amid oversupply and falling global demand for electronics.
Samsung’s profit has slumped on-year for four consecutive quarters and it is expected to fall again in the current quarter, before recovering next year on the back of stronger chip sales, analysts say.
“Global 5G smartphone sales will be in full swing next year, supporting solid memory-chip demand growth,” said analyst Park Sung-soon at Cape Investment & Securities.
Samsung’s cross-town chip rival, SK Hynix, also expects 5G-enabled smartphones to help lift the global memory market out of the doldrums next year.