Samsung Electronics has presented a cautiously optimistic view of the memory chip market next year, but said it would conduct flexible investment and the operation of a production line monitoring memory chip market conditions.
Samsung’s memory chip business has been suffering from falling prices. It’s operating profit in the semiconductor sector posted 3.05 trillion won (US$2.5 million) in the third quarter, down 10.6 trillion won from 13.65 trillion won a year earlier, also down 350 billion won from 3.4 trillion won in the previous quarter.
“Looking ahead to 2020, while challenging to provide a detailed forecast due to ongoing uncertainties involving macroeconomic issues, there are positive signs on the demand outlook from data center customers, while the expansion of 5G smartphones is expected to continue to lead the higher density trends,” Samsung said in a press release.
“Demand for 2020 should be viewed with caution as uncertainties remain in the macroeconomic environment. As such, the company plans to focus more on flexible investment and capacity operation depending on market conditions.”
Samsung also expects demand for memory chips in the fourth quarter this year to improve.
It said that NAND demand for high-capacity storage was expected to remain strong, and SSD (Solid State Drive) demand was favorable as data centers and mobile sectors are expected to adopt high-density products.
The firm said DRMA demand would remain solid from servers and mobile sectors in the fourth quarter and show some quarter on quarter increases.
For the logic chip business, Samsung expected strong demand for its high-resolution image sensors in the fourth quarter, while demand for mobile APs (Application Processor) and DDI (Display Drive IC) was forecast to be weak.
Samsung announced that it posted 7.78 trillion won (US$6.7 billion) of operating profit in the third quarter of this year. It was slightly better than the previously estimated 7.7 trillion won, but it fell 55.7% from the third quarter of last year when it posted record-high earnings, but it was up 17.9% from the previous quarter.
Revenue posted 62 trillion won, a 5.3% drop on-year from 65.46 trillion won in the same quarter last year. But it was an increase of about 10.5% from 56.13 trillion won in the second quarter of 2019.
The semiconductor business posted 17.59 trillion won in sales in the third quarter, down 29% from a year earlier. In particular, sales in the memory sector plunged 37% on year to 13.26 trillion won.
Samsung’s display business posted 1.17 trillion won in operating profit in the third quarter, up 0.07% from a year ago.
The smartphone business shined as sales of smartphones such as the Galaxy Note 10 and the A-series increased, and the profitability of mid- to low-end products improved. It posted 2.92 trillion won in operating profit in the third quarter, a 31.3% jump from 2.22 trillion in the same period last year and an 87.1% rise from 1.56 trillion won in the previous quarter.
Samsung Electronics said it spent 6.1 trillion won on facility investment in the third quarter, with a cumulative investment of 16.8 trillion won for the first three quarters of this year. It spent 14 trillion won in the semiconductor sector, and 1.3 trillion won in the display business.
The firm said its facility investment plan for the fourth quarter is also focused on strengthening the competitiveness of the chip business.