Samsung's solid chip sales unlikely to help profits

Samsung's solid chip sales unlikely to help profits

The global shift to working from home is boosting demand for Samsung's memory chips, but the South Korean tech giant's first-quarter profits are still likely to remain flat.

Gloria Tso reports.

The global shift to working from home is boosting demand for Samsung's memory chips as laptop makers and data centers snap them up.

But in guidance set to release Tuesday (April 7), the South Korean tech giant's first-quarter profits are still likely to remain flat.

That's because sales of the company's smartphones and other consumer electronics are falling, and analysts tell Reuters that longer-term, the bump in chip sales could be at risk, too.

The shutdown of factories and retail stores worldwide is hitting the company on two fronts and unnerving investors.

Samsung's shares have slumped 15% so far this year but outperformed the wider market's fall of 22%.

Prospects for the company's flagship Galaxy S20 premium smartphones, launched just over a month ago, are looking dim.

An official at a local carrier in South Korea told Reuters the 5G enabled phones are already selling at a third of their launch price.

One brokerage - Hanwha Investment & Securities - estimates Samsung's smartphone sales in the first quarter fell 17% from just a year ago.

Last year Samsung's full-year earnings were halved by their smartphone and chip businesses' slump in profits.

Smartphone rival Apple has also rolled back its profit forecast over production and retail shutdowns in China.