Samsung Suffers an Earnings Shock
Samsung Electronics, which recorded an earnings shock in the fourth quarter of last year, is likely to lose its number one position in the global semiconductor industry to its biggest rival, Intel.
Industry analysts estimate Samsung’s semiconductor sales in the fourth quarter of 2018 at below 20 trillion won, a sharp plunge from the company's all-time high quarterly sales of 24.77 trillion won recorded in the third quarter of last year. They say it would not be easy for the company to attain quarterly sales of 20 trillion won this year.
In contrast, Intel said in an earnings guidance in October of 2018 that its sales would reach US$19 billion in the fourth quarter of last year. Although the figure is not much different from the US$19.2 billion the company attained in the previous quarter, Samsung Electronics' relative sluggishness is expected to put Intel on the top spot.
Samsung Electronics surpassed Intel for the first time in the second quarter of 2017 by posting about US$15.8 billion in sales against Intel’s US$14.8 billion.
In particular, Samsung Electronics took the top spot in 2017 in terms of annual sales by recording 74.3 trillion won against Intel’s 69.1 trillion won. Samsung is expected to retain its first spot in 2018 as well. A report released by global market researcher Gartner on Jan. 7 said that Samsung Electronics posted US$75.8 billion in sales last year, surpassing Intel’s US$65.9 billion.
However, the point is that Samsung Electronics is likely to lose its crown to Intel as its semiconductor business is expected to recover slowly this year. Prices of memory chips such as DRAMs and NAND flashes have fallen sharply since the second half of 2018 while the non-memory market, the main market for Intel, is less sluggish than the memory market.
However, it is hard to predict the semiconductor market as a drop in demand for semiconductors for data centers, which is cited as a cause of the sluggish memory market, is also having a big impact on the non-memory industry. Furthermore, some analysts predict that memory product prices will turn upward in the second half of this year.