Samsung expects gradual global chip demand rebound in H2

By Joyce Lee and Ju-min Park

SEOUL (Reuters) -Samsung Electronics flagged on Thursday a gradual global chip demand recovery after an ongoing glut led to continued losses in the technology giant’s key business in the June quarter, despite a production cut.

“Looking to the second half of the year, the (memory chip) market is expected to gradually move toward stability considering increasing production cuts in the industry,” the world’s biggest memory chip and smartphone maker said in a statement.

Chip clients are expected to move from using up inventory to buying semiconductors again, the South Korean company added, a day after rival SK Hynix also pointed to a nascent market recovery amid robust artificial intelligence demand.

Samsung (KS:) reported a 95% plunge in June quarter profit, as the chip industry’s downturn persisted despite output cuts because of weaker demand for products reliant on semiconductors from consumer gadgets to servers.

Operating profit fell to 669 billion won ($527 million) in April-June, from 14.1 trillion won a year earlier.

That was broadly in line with the company’s estimate of 600 billion won this month, and was the second-lowest quarterly profit in 14 years.

Revenue fell 22% to 60 trillion won.

Its chip division reported a 4.36 trillion won loss during the quarter, a continued divergence for what is normally Samsung’s most important cash cow. It had reported a 9.98 trillion won profit a year earlier.

However, chip losses shrank slightly from the first quarter’s 4.58 trillion won due to improved sales of DRAM chips, used in PCs, mobile phones and servers, analysts said.

Taiwan’s TSMC, the world’s largest contract chipmaker, lowered its annual sales guidance earlier this month and warned of cost challenges as it battles weak global demand.

($1 = 1,269.2200 won)