DRAM Pricing Debacle Hits Samsung
Samsung posts weak Q1 on chips, outlook tough – Yahoo! News
Samsung Electronics Co. Ltd. (005930.KS), the world’s top memory chip maker, posted a slightly bigger-than-expected 15 percent drop in first-quarter earnings as margins tumbled, and predicted more price pressure to come.
The April-June outlook remains grim as Samsung, the most valuable technology company outside the United States, forecast a further 5-10 percent drop in DRAM (dynamic random access memory) prices in the second quarter.But it said the second quarter would represent a bottom for DRAM profitability, and analysts expect Samsung’s earnings to improve in the second half as seasonal demand for consumer electronics picks up.
January-March operating margins on chips slumped to 12 percent from 31 percent in the previous quarter and 26 percent a year earlier. The division’s operating profit fell 52 percent from a year ago and 67 percent from the prior quarter.”DRAM and NAND prices fell so sharply that they offset our cost reduction efforts,” Lee Keon-hyok, vice president of investor relations at Samsung, said in a conference call on Friday.
Prices for NAND flash chips, widely used in portable electronic gadgets, should rise 20-25 percent in April-June after falling more than 40 percent in the first quarter, Samsung said.
It is yet another piece in the supply puzzle. We aren’t expecting such a rapid recovery.
Like this article? Why not try out:
