Stumbling Samsung Forecast Huge Profit Decline

Korean tech giant Samsung has forecast a 56 per cent decline in profit compared to last year for Q2 2019 off the back of falling global smartphone sales and an oversupply of the semiconductor and memory chips that form a large part of its business.

Consolidated operating profit is expected to fall to 6.5 trillion Korean won (roughly A$7.9 billion), Samsung’s worst result since Q3 2016, when the company was hit by the embarrassing and expensive exploding Note 7 battery debacle.

The company recently faced a similar embarrassment after rushing to market with a folding phone that had severe issues requiring a redesign, and is still yet to be released.

Samsung is the world’s biggest supplier of DRAM and NAND memory and storage chips, and its semiconductor division makes up the majority of its earnings.

According to Reuters the company is now facing an oversupply of chips, which are falling in price, as a protracted US-China trade dispute targets one of Samsung’s biggest clients and rivals Huawei.

Japan has also recently moved to restrict exports to South Korea of materials used to make chips and displays over a dispute relating to forced labour that dates all the way back to World War Two.

Fellow Korean electronics maker LG also forecast a decline, with profit expected to fall more than 15 per cent over the year before.