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Guide to Samsung Q2: weak memory demand


A man goes through the logo of Samsung Electronics outside the building of Samsung in Seoul, South Korea.

Jung Yeon-Je | AFP | Getty Images

Samsung Electronics said Friday that profits for the three months ending June decreased in the middle of the previous year after the continuity of weakness in the price and demand for memory chips.

The world's largest memory maker and supplier of memory chips said the operating result was 6.5 trillion won of Korean (5.5 million dollars), which was slightly better than an industry estimate of 6 billion won , but it fell around 56% over the previous year.

Memory components, which are used on cell phones and business servers, include the main business with Samsung results.

Experts have said that the entire semiconductor sector is going through an inventory adjustment period, which is keeping the demand low and causing an excess of supply that is expanding the price. Some have predicted the excessive inventories of continuous DRAM and NAND memory chips, which would reinforce the recovery of the sector in the second half of 2020.

DRAM chips allow computers, phones and tablets to run multiple applications at the same time, while NAND chips work as primary storage.

The final figures for the quarter are counted towards the end of this month.

If these numbers coincide with Friday's targeting, as they usually do, it would be the second consecutive quarter in which Samsung's operating profit was reduced in the middle of the same period of the previous year.

In the three months ending in March, Samsung's profits fell around 60% year-on-year to 6.2 billion won of Korean (5.3 million dollars).

Commercial tensions between Japan and South Korea

The strong tension between Seoul and Tokyo will probably exacerbate the situation of Samsung, as well as other South Korean rivals like SK Hynix.

There is a growing dispute between the two countries about forced labor in time of war, which caused Japan to announce a few more restrictive restrictions on exports of high-tech raw materials that South Korean electronics companies use to make chips and screens of smartphones.

Meanwhile, South Korea said Thursday it could retaliate.

Citi analysts said they expect that this week's Tokyo decision "will have a limited short-term impact on Samsung and SK Hynix thanks to a high level of inventory, but (these companies) will have difficulty obtaining semiconductor materials soon. "

Others have pointed out that the effects of undulations in the semiconductor and visualization sectors.

"Because of the volumes of chemicals needed in the semiconductor manufacturing process, it is unlikely that the main chip providers will be able to find adequate quantities for suppliers outside of Japan," wrote Len Jelinek, executive director of semiconductor research at IHS Markit. recent note

– Reuters and Patti Domm of CNBC contributed to this report.

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