Samsung Electronics shares jumped after it announced guidance on operating income. Its shares gained around 1.7% in yesterday’s sessions in Seoul on Tuesday.
The company also issued a warning that its operating income probably plummeted 56% in the third quarter. Such a decline was due to the dull demand for memory chips.
On the other hand, analysts are expecting a turnaround for the company next year. According to a Daiwa analyst, the company’s memory chip demand should have a boost.
The boost, in turn, comes from improvements in extreme ultraviolet lithography. This development is a crucial breakthrough in chip manufacturing.
At the same time, the company’s memory chip and display businesses should grow after new Apple and Huawei flagship phones.
Its rival, Huawei, has been suffering from the US government’s penalties and sanctions. The US has accused the company of helping China spy through its devices.
Global Uncertainty Dampens Samsung Sales
For the better part of 2017 and 2018, the company’s experienced a boom in memory chip sales. Around that time, operating income reached 17.6 trillion won.
However, this year’s global trade uncertainties have dampened buyers’ appetite for new phones, data servers, and electronic gadgets.
Prices had plunged because manufacturers had produced too much when the demand was higher.
For three straight quarters, the South Korean tech giant’s profits declined. Although analysts are optimistic, markets expect the company to extend the decline to the whole year.
So far this year, the company’s shares have recovered around 23%. At the same time, investors have sold off their positions as they expected a semiconductor slowdown.
Still, if the analysts are right, the memory chip business could be Samsung’s ride towards better profits. This rise is possible, especially after the company launched its latest flagship device, the Galaxy Note 10, last August.
As of this year, the company has outpaced US’s Apple Inc. in the 5G race. It has also released the first mainstream foldable phone. These recent developments may help add more boost to the company’s shares.