Samsung Electronics’ share price sink 1.41% after firm flags 56% fall in Q2 operating profit

Shares of Korean technology firm Samsung Electronics sank by 1.41% on Friday after the company said it expects operating profit to tumble 56% for the second quarter of this year due to a softening chip market.

The group forecast its operating profit from April to June to reach around 6.5 trillion won, which will be 56% lower compared to a year ago. Samsung Electronics is the flagship subsidiary of conglomerate Samsung Group.

Revenue for the quarter is projected to slip 4% to 56 trillion won.

The dip in operating profit would mark the lowest profit for the firm since the third quarter of 2016, when the firm was hit by problems of its Galaxy Note 7 catching fire which then caused the firm to recall millions of the new phones across its worldwide markets.

Samsung share price lower by 1.41%

Shares of Samsung Electronics fell by 1.41% or 650 Korean won, at 45,350 Korean won, at 11.05am Seoul time.

Year-to-date, the electronics firm’s shares have risen by 17%, from the share price of 38,750 Korean won on January 2, 2019.

Falling chip prices

Chip prices have been falling as global supply increases while demand softens.

In April, the firm pushed back the release of its new Galaxy Fold phones after reviewers claimed that they received phones with screen problems. The release of the folding handset would have spurred demand and driven sales for the quarter.

A fall in memory chip shipments to China’s Huawei also contributed to the supply glut. Companies worldwide have been forced to restrict their business dealings with Huawei to comply with United States trade sanctions.

Although the reduced intake from Huawei likely caused chip earnings to take a hit, Samsung Electronics’ smartphone sales are likely to improve from the Chinese firm’s fall in handset sales internationally.