Due to Sluggish Memory Chip Market
Samsung Electronics Co. has yielded the top spot in terms of semiconductor operating profit to Intel due to a sluggish memory chip market.
Samsung Electronics announced on April 30 that it posted 52.39 trillion won (US$44.89 billion) in sales and 6.23 trillion won (US$5.34 billion) in operating profit in the first quarter. The figures were almost the same as the tentative results announced on April 5. The company’s operating profit plunged a whopping 60.2 percent from a year earlier, while its sales fell 14 percent. In particular, the Device Solutions Division which is in charge of memory chips saw its operating profit drop 64.3 percent to 4.12 trillion won (US$3.53 billion) from 11.55 trillion won (US$9.90 billion) a year ago.
An official from Samsung Electronics attributed the decline in overall results to weaker demand for memories, which resulted from inventory adjustment by major clients, and a sharp drop in memory prices. However, Samsung’s announcement did not come as a shock to the market as the company has continuously said from the fourth quarter of last year that its results in the first quarter of 2019 would be poor owing to worse market conditions.
Samsung’s operating profit was smaller than that of Intel, which recently announced sales of US$16.10 billion (18.78 trillion won) and operating profit of US$4.20 billion (4.90 trillion won) in the first quarter. Samsung had ranked first in terms of semiconductor operating profit for two years since the first quarter of 2017.
Intel also saw its operating profit decrease about 7 percent compared to a year earlier, but it could minimize the performance deterioration thanks to its business structure, which is focused on the non-memory sector, including central processing unit (CPU).
Meanwhile, Samsung Electronics invested a total of 4.50 trillion won (US$3.86 billion) in facilities – 3.60 trillion won (US$3.08 billion) in the semiconductor sector and 300 billion won (US$257.07 million) in the display sector, in the first quarter of this year. In addition, the company is planning to pay out a total of 2.40 trillion won (US$2.06 billion) of quarterly dividend in May as it resolved to pay 354 won (US$0.30) per share for the first quarter dividend.