Profit fall likely milder than forecasts as chip prices bottom out: Samsung

Samsung Electronics on Wednesday said quarterly operating profit likely fell at a milder pace than analysts forecast, indicating memory chip prices bottomed out and strengthening hope of recovery from an industry downturn.

The announcement sent Samsung’s share price up 2.2% in morning trade, bucking the wider market’s 0.8% fall, with cross-town chip rival SK Hynix Inc also up over 5%.

Samsung, the world’s biggest maker of memory chips, has seen earnings drop since late 2018 as a weak global economy curbed spending by data centre customers while rising inventories squeezed prices, ending a two-year industry boom.

But expected easing in the Sino-US trade war is lifting optimism for a return of demand this year from server customers and makers of fifth-generation (5G) network-ready smartphones. Last month, Samsung’s US chip rival Micron Technology Inc forecast the industry to recover in 2020.