SEOUL, April 27 (Reuters) – Samsung Electronics Co Ltd (005930.KS) flagged a gradual restoration for chips within the second half of the yr after its semiconductor enterprise reported a document $3.4 billion loss on Thursday, pushed by a chip glut from weak demand for tech units.
A worldwide downturn in semiconductor purchases amid an financial slowdown and company belt-tightening despatched chip costs plummeting within the first quarter, triggering manufacturing cuts throughout the sector.
By the second half of the yr, prospects may have run down stock and can step by step begin shopping for chips once more, Samsung mentioned.
“We anticipate stock ranges to start out dropping within the second quarter,” mentioned Jaejune Kim, government vice chairman of Samsung’s reminiscence enterprise.
For the present quarter, Samsung mentioned it anticipated restricted restoration for reminiscence chips as main information centre companies invested extra conservatively in servers.
The world’s largest reminiscence chipmaker mentioned working revenue fell to 640 billion gained ($478.6 million) for the January-March quarter, down 95% from a yr earlier and its smallest revenue for any quarter in 14 years.
The South Korean tech large’s chip division – usually its most dependable money cow – reported a 4.58 trillion gained ($3.41 billion) loss in comparison with a 8.45 trillion gained revenue a yr earlier.
Customers world wide have reduce on purchases as a result of surging inflation. Consequently, smartphone, private pc and server firms have run down inventories, inflicting chip costs to plunge by about 70% over the earlier 9 months.
Samsung introduced a uncommon chip manufacturing minimize earlier this month, becoming a member of smaller rivals resembling SK Hynix Inc (000660.KS).
Though this might assist chip costs get well barely, analysts mentioned Samsung’s revenue within the present quarter could also be much like the primary quarter and not using a elementary restoration in demand for units that use chips.
“Along with manufacturing cuts within the present quarter, Samsung mentioned its manufacturing will probably be versatile within the second half, which implies it may interact in additional cuts to handle stock,” mentioned Lee Min-hee, analyst at BNK Funding & Securities.
BUY CHIPS AGAIN
Regardless of the document loss in chips, Samsung mentioned capital expenditures within the first quarter totalled 10.7 trillion gained, the very best for the primary quarter of any yr.
Out of that, 9.8 trillion gained was spent on chips as Samsung units up manufacturing in its Taylor, Texas and Pyeongtaek, South Korea factories.
Samsung mentioned it deliberate to maintain this yr’s reminiscence chip funding at the same degree to 2022 to safe plant area.
Its optimistic long-term outlook remained unchanged because the proliferation of electrical autos, synthetic intelligence and high-performance computing would gasoline demand for chips, it mentioned.
Samsung’s cellular enterprise was a vibrant spot, reporting 3.94 trillion gained revenue within the first quarter, up from 3.82 trillion gained a yr earlier.
“Samsung is specializing in revenue moderately than shipments” because it meets extra resilient demand for premium smartphones moderately than quantity, mentioned Jene Park, senior analyst at Counterpoint.
Within the second half, Samsung forecast the smartphone market would improve in each shipments and income.
Shares in Samsung rose 0.3% after the earnings name, reversing an earlier drop. The inventory has risen about 16% year-to-date as traders anticipate a reminiscence chip restoration within the second half.
($1 = 1,341.4600 gained)
Reporting by Joyce Lee & Heekyong Yang; Enhancing by Jacqueline Wong
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