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Recovery, is calling for mobile chip prices to stabilize

SEOUL (Reuters) – Samsung Electronics Co Ltd (005930.ME), it is likely to post a fourth straight quarter of declining profit when it reports interim earnings next week, investors will be hoping that the worst is over, with the chip prices have started to recover.

FILE PHOTO: A visitor is using a mobile phone at the Samsung stand at the Mobile World Congress in Barcelona, Spain, February 26, 2019. REUTERS/Rafael Marchante/File Photo

Falling semi-conductor prices, and the drawn-out US-China trade war-to have been bitten into profits at the very top of the world’s memory chip and smartphone maker, but analysts expect earnings growth next year, as chip-prices-to-run.

“The chip market is in the process of recovery, as the stock has to fall on the supply side,” said Avril Wu, an analyst at tech researcher TrendForce.

Prices for DRAM chips, which will help you in the case of devices with a variety of tasks to perform, are forecast to fall by a low digit percentage in the first half of the 2020s, compared to the 20%to 25% decline in the same period of this year, TrendForce said.

Samsung is likely to be flying the flag of a 60% decline in the July-September operating profit of 7 trillion won ($5.8 billion) on Tuesday, according to the Refinitiv SmartEstimate, based on the estimates of 28 analysts.

The Chips to bring in more than half of Samsung’s earnings.

“There is a growing expectation in the mobile phone market, from semiconductor. It’s not that bad if you look at the chip prices, supply and demand,” said a Seoul-based fund manager, which owns Samsung shares. He declined to be named as he was not authorised to speak to the media.

But things are looking up for Samsung in terms of chip prices, analysts remain concerned about the impact of the US-China trade war is in the big exporters, such as South Korea’s tech giants.

“It is difficult to quantify the damage caused by the crisis, but to be sure, there is a conservative attitude to investment, and expenditure of, the Samsung server and the mobile-chip clients as a result of the trade war,” Lee Su-bin, an analyst at electrical components & equipment capital Securities, said.

The US chipmaker Micron Technology, Inc. (MU.O) gave a dismal earnings outlook last week, citing an uncertain economic environment.

MOMENTUM IS BUILDING

In the mobile business, which accounts for approximately 24% of the total operating income in the second quarter, Samsung’s profits of U.S. sanctions against the Chinese mobile network equipment rivals Huawei Technologies [HWT.UL listed].

Samsung’s share of the European mobile phone market jumped to a five-year high of more than 40% in the second quarter while Huawei’s slipped below the 20 per cent, according to data from research firm Canalys.

Shoppers will be leery of buying from Huawei’s new flagship handset as well as with the U.S. restrictions to prevent the transfer to Google Mobile Services, analysts said.

In the meantime, Samsung’s latest Note series, with the speedy 5G connection with the sales of its predecessor, a market tracker to Counterpoint Research said.

Also, Samsung has unveiled its first folding smartphone in South Korea, and the United States of america, it is of a good level of development”, in spite of its small contribution to the income, the said Eo Kyu-jin, an analyst at DB Financial Investment.

In search of growth, Samsung has been pouring resources into its telecom network equipment business as the Huawei phone is always excluded from these contracts because of security concerns.

Samsung said on Monday it had inked a deal to supply the fifth-generation of networking equipment in Japan No. 2 telecommunication company KDDI Corp (9433.(T).

Reporting by Ju-min Park; additional reporting by Heekyong Yang, and Hayoung Choi; Editing by Stephen Coates

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