With Samsung Electronics anticipated to suffer its most significant annual profit drop in at the very least a decade, investors are relying on an expected uptick in the memory-chip industry to cure the tech giant’s ills this year.
When it points preliminary fourth-quarter results on January 8, the world’s top manufacturer of memory chips utilized in smartphones, laptops, and servers is set to post a 40% slump in working profit to 6.48 trillion won ($5.56 billion), based on Refinitiv SmartEstimate, weighted towards extra persistently accurate analysts.
The three months ended December are anticipated to mark the South Korean agency’s fifth year-on-year decline in quarterly revenue, ending a year marred by bloated stockpiles of chips that squeezed costs, and the U.S.-China commerce war that roiled global supply chains and prospects for consumer demand.
With 2018 having been a document yr for earnings, in 2019’s hunch likely means Samsung posted its largest percentage plunge in annual profit in at least a decade.
However, with the U.S. suspending planned December tariffs on Chinese items, including cellphones and laptops, concerns about demand have eased as optimism for the launch of 5G networks worldwide has grown.
Reflecting that temper, analysts polled by Refinitiv SmartEstimate count on Samsung’s annual profit to surge practically 40% in 2020. The corporate itself doesn’t usually difficulty full-year earnings estimates.
Regardless of 2019’s robust times for the world of chips, Samsung nonetheless generated half of its January-September profit from the business. That core strength, including optimism for this year, helped Samsung’s shares ride out weak earnings to end 2019 with a 44% gain, compared with an 8% increase for the Seoul benchmark index.