Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Semi Stocks Slip on Samsung's Warning of Softer Chip Demand

Published 28/07/2022, 10:24
Updated 28/07/2022, 10:24
© Reuters.

© Reuters.

By Senad Karaahmetovic

Samsung (KS:005930) issued a warning that it expects to witness weaker chip demand from smartphone and PC makers amid mounting fears of a recession.

Although the electronics giant sees a more resilient demand from server clients, it also warned that this business segment is not immune to macro headwinds.

Samsung reported its revenue soared 21% to 77.2 trillion won. The company also reported a Q2 operating profit of 14.1 trillion won ($10.8 billion) to beat the 14 trillion won estimate. This also marked the highest second-quarter profit in 4 four years.

The vast majority of the profit, over 70%, came from the chip segment while the mobile business contributed with profits of 2.62 trillion won. Samsung also said it benefited from a strong dollar.

"Fundamental demand for server (memory chips) will stay solid as the investments in core infrastructure and new growth areas such as AI and 5G are expected to keep expanding, centering on major data centre companies," Samsung said.

The company added that its mobile business witnessed lower profits due to the Russia/Ukraine conflict, inflation concerns, and higher costs.

"Server (chip demand) is less affected by macro issues... But if global recession occurs, server clients will also have to adjust their inventory," Jin-man Han, executive vice president of Samsung's memory chip business, said on an earnings call.

"Due to high uncertainty, we are updating our forecast constantly," he added, according to Reuters.

Shares of U.S. semi stocks are down this morning on Samsung’s warning. AMD (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA) are down 0.8% and 1.3%, respectively, while Micron Technology (NASDAQ:MU) is down 1.4%.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.