Samsung Electronics achieved a 56% decline in the second quarter as chip problems persisted by Reuters

By Ju-min Park and Heekyong Yang

SEOUL (Reuters) – [19659005] Samsung Electronics Co Ltd (KS 🙂 said it expected the chip market to bottom out and start recovering during the second half as it saw a 56% decline in quarterly results Wednesday, hit by declines in semiconductor prices in the middle of oversupply .

The outlook of the global chip leader will give investors hope that the notoriously cyclical memory chip industry is shifting from a downturn linked to a decline in sales of gadgets such as smartphones.

"Server demand is expected to increase gradually as customers adjust inventory levels and continue to buy, while PC demand is likely to expand as well," said the South Korean technology giant, citing demand for its DRAM chips.

However, Samsung said it was facing "persistent" insecurities in memory or mobile and other businesses in the second half. While it did not provide further details Wednesday, it has previously cited the US-China trade war as a monetary force.

The results of third-quarter Korean chipmakers may be influenced by Japanese curbs for the export of important materials, the latest salvo on a diplomatic row between Seoul and Tokyo over wartime forced labor.

South Korea's SK Hynix (KS 🙂 last week warned of possible disruptions in chip production due to Japanese export controls, saying it would cut investment and production to reduce supply.

The chip business was still Samsung's top earner, but it reported a steep 71

MOBILE TECHNOLOGY [19659004] The mobile business posted 1.6 trillion in quarterly profits, down 42% from a year ago, said Samsung, weighed down by slower sales of flagship models and increased marketing costs.

While Samsung is planning two advanced mobile products in the second half to revive profits – including the first collapsible device – weakness in the global smartphone market will limit any upside.

Arch rival Apple Inc (O 🙂 reported another quarter of lower iPhone sales, but increased overall revenue thanks to the growing contribution of content services such as music and apps, which Samsung lacks.

Samsung's Galaxy Fold phone will continue sales in September in select markets. Analysts say that headlines about glitches with sample folds will dampen consumer excitement around the launch.

Samsung shares were down 0.9% from 0100 GMT, against a 0.6% fall in the broader market ().