FILE PHOTO: the logo of The company is listed on the Samsung’s press conference at the Consumer Electronics Show (CES) in Las Vegas January 7, 2013. REUTERS/Rick Wilking/File Photo
SEOUL (Reuters) – Samsung Electronics Co Ltd (005930.KS) posted a 56 percent drop in second-quarter operating profit on Wednesday, hit by the decline in memory chip prices are in the midst of plenty.
The operating profit of 6.6 trillion won ($5.6 billion) in the second quarter, in line with the 6.5 trillion won, the company had estimated earlier this month.
In the notoriously cyclical memory chip industry is in the midst of a crisis after about two years of the boom, such as a slowdown in demand for gadgets such as smartphones, pulls down chip prices.
South Korea’s chip giant will also be hit by the Japanese curbs on the export of nuclear materials, and the latest salvo in a diplomatic row between Seoul and Tokyo over wartime forced labor.
Samsung said in a statement to the memory chip in question is expected to grow in the second half, underpinned by the server in DSL customers will resume their purchases.
Last week, Samsung’s Korean chip rival SK Hynix (000660.KS) said it would cut investment and production in order to shore up a nascent recovery in the chip on demand.
The chip, the company is still Samsung’s top-earner, but there was a significant decrease of 71% to 3.4 trillion won and the operating profit of 11.6 billion won in the same period a year ago.
The mobile business recorded a 1.6 trillion won in quarterly profit, down 42% from a year ago, Samsung is said, weighed by slow sales of flagship models, and to increased marketing costs.
Reporting by Ju-min Park and Heekyong Yang; Editing by Stephen Coates