Samsung Warns of Q2 Profit Slump as COVID-19 Dents Sales
Samsung Electronics stated Wednesday it expected revenue to decline in the current quarter because of a coronavirus-related slump in sales of smartphones and TVs, although the chip enterprise would remain strong.
The South Korean tech group joined other tech titans equivalent to SK Hynix and Intel in declining to provide annual forecasts because of the uncertainty in regards to the duration of the pandemic.
It mentioned that while work-from-home orders and the related growth in online learning would boost demand for memory chips, the outlook for smartphones and TVs was bleak as consumers put off discretionary spending.
In contrast, Samsung stated it expected its mobile and TV profits to drop significantly in Q2 as customers reined in spending on non-essentials, and stores and plants are closed due to the outbreak.
The world’s top manufacturer of memory chips and smartphones reported operating revenue surged 3% to 6.4 trillion won ($5.2 billion) in Q1, fueled by solid chip demand and reduced marketing spending on smartphones.
Samsung Electronics shares dropped 0.3% after the results Wednesday, while the wider market was up 0.6%.
Other chip manufacturers SK Hynix and Intel last week posted forecast-beating Q1 earnings; however, they didn’t provide full-year estimates.
Samsung’s chip business reported Q1 operating profit of 3.99 trillion won, down 3% from a year ago.