Samsung Electronics says fourth-quarter profit slumped 34%, flags gradual chip recovery

SEOUL (Reuters) – Samsung Electronics Co (005930.KS) said on Thursday its fourth-quarter operating profit slid by a third as the South Korean conglomerate soaked up a downturn in the memory chip market, but forecast a gradual recovery in chip prices this year.

The world’s biggest memory chip and smartphone maker reported operating profit of 7.16 trillion won ($6.13 billion), down 34% and in line with its own previous estimate. Net profit fell 38% to 5.2 trillion won, with revenue easing 1% to 59.9 trillion won – also meeting estimates.

A two-year boom in memory chip prices started to fade in late 2018 as demand slumped from data center customers, while the U.S.-China trade war muddied purchase decisions, creating a supply glut.

Fourth-quarter operating profit more than halved to 3.45 trillion won in Samsung’s mainstay chip division, while mobile division profit improved nearly 67% to 2.52 trillion won.

“Looking ahead to 2020, Samsung expects improvements in overall business performance but also sees continued uncertainties in the global business environment,” Samsung said in a statement, without identifying particular issues that could affect its operations.

Samsung’s share price has risen 6% this year, following a 44% rally last year, as expectations of an easing of U.S.-China trade tensions fueled hope of a rebound in the chip industry.