SEOUL: Samsung Electronics Co Ltd (005930. KS) cautioned that chip demand from smartphone and PC makers will further weaken as people will buy less. A more flexible market for server clients could also see an adjustment amid slowdown concerns.
While the world’s top maker of memory chips and smartphones turned in its best April-June operating profit since 2018 on solid server chip demand, geopolitical issues hit its mobile business, inflation concerns, higher components, and Profits weak amid logistics costs.
“Server (chip demand) is less affected by macro issues… But if a 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 a conference call.
“Due to high uncertainty, we are updating our forecast constantly,” he added.
Earlier, San Diego-based Qualcomm Inc (QCOM.O) warned of a hit to fourth-quarter sales from cooling smartphone demand, adding to the chorus of voices cautioning about chip sales as red-hot inflation squeezes consumer spending.
Also, the Ukraine crisis and COVID-19 lockdowns in China, the world’s biggest smartphone market, have worsened supply-chain snags, forcing many phone makers to cut orders for chips.
Samsung will respond to the uncertainty by “flexible” deployment of short-term capital expenditure and disciplined supply of chips to fit demand, Han said without elaborating.
An analyst at Cape Investment & Securities, Park Sung-soon, said he expects a “capital expenditure cut by Samsung as well as SK Hynix for next year in memory chip business”.
However, in the second half, Samsung was relatively optimistic about demand for smartphones, saying supply disruptions for the company had been resolved and injunction would either stay flat or even see a single-digit growth.
It aims for foldable phone sales to surpass that of its past flagship smartphone, Galaxy Note, in the second half. It is expected to unveil its latest foldable on Aug. 10.