Samsung Electronics Co Ltd (005930. KS) warned that chip demand from smartphone and PC makers would decline as people shopped less, and the more durable demand from server clients would also change due to recession concerns.
While the world’s largest memory chip and smartphone manufacturer reported its most significant April-June operating profit since 2018 because of robust server chip demand, it claimed profits in its mobile business were down due to geopolitical uncertainties, inflation fears, and increased component and logistics costs.
Earlier, Qualcomm Inc (QCOM.O) of San Diego warned of a hit to fourth-quarter sales from cooling smartphone demand, joining the chorus of voices warning about semiconductor sales as high inflation squeezes consumer spending.
Furthermore, the Ukraine crisis and COVID-19 lockdowns in China, the world’s largest smartphone market, have exacerbated supply-chain issues, causing several phone makers to reduce chip purchases.
Samsung will respond to the uncertainties with “flexible” short-term capital investment and “disciplined” chip supply to meet demand, Han said without elaborating.
Park Sung-soon, an analyst at Cape Investment & Securities, predicts a “capital expenditure drop by Samsung as well as SK Hynix for next year in the memory chip market.”
However, Samsung remained relatively bullish about smartphone demand in the second half, stating that supply problems for the firm had been chiefly fixed and that demand would either remain constant or expand by a single digit.
It expects foldable phone sales to outpace those of its last premium smartphone, the Galaxy Note, in the second half. On August 10, it is likely to reveal its latest foldable.
