Samsung is likely to lose memory chip shipment in its second-quarter results due to the lower business yield from Huawei.
Industry Analysts says the quarterly result of the South Korean firm will the lowest in nearly three years with the prospect an earning recovery still some quarters away as a period of oversupply continues unabated amid a broader slowdown in tech markets, reported Reuters.
Samsung the biggest supplier of DRAM and NAND flash chips and currently on the top spot of smartphone makers list, followed by Huawei for the second place and also a client of Samsung’s memory chips.
After the trade restrictions imposed by the US, Donald Trump is urging its allies to bar business with Huawei, which is not only causing business loss to Huawei but also for the firms that are losing business with one of their regular customers.
“How much Huawei will use chips ahead is definitely a swing factor in prices,” said analyst Jay Kim at Sangsangin Investment & Securities. “When there are not many players that can buy chips instead of Huawei, then Samsung has to cut prices to sell them.”
Prices for DRAM chips, which provide devices with temporary workspaces and allow them to multi-task, aren’t likely to gain momentum in the second half of the year, said analyst Avril Wu at tech researcher TrendForce. Moreover, she said, it will be difficult for Samsung to clear its inventory until the first half of 2020.
TrendForce estimates DRAM prices in the three months through June fell 25%. Last month, it lowered its forecast for the July-September quarter to a decline of 15% to 20%, from 10%.