Samsung's chip business was hit hard by U.S. ban on Huawei

Samsung's chip business was hit hard by U.S. ban on Huawei
According to Reuters, Samsung Electronics is expected to release a preliminary look at its second-quarter earnings report this coming Friday. The numbers should show that the South Korean manufacturer was negatively affected by the U.S. ban that prevented Huawei from obtaining U.S. parts and software. Samsung's shipments of memory chips to Huawei were down sharply during the three month period that covers April through June. This has led to a backup in supplies of Sammy's DRAM and NAND chips forcing the manufacturer to cut prices in order to move its inventory. Since 67% of Samsung's profit comes from selling chips, Huawei's purchases have a lot of influence over how well the manufacturer does in any given quarter.

Huawei's inability to access its U.S. supply chain wasn't totally bad news for Samsung. With international sales of Huawei phones down as much as 40% in the quarter, it is quite probable that Samsung was able to pick up some of this business. The company's high-end Galaxy S10 line and its hot-selling Galaxy A mid-rangers might have ended up in the pockets of consumers outside of China who backed away from purchasing a Huawei model. HI Investment & Securities senior analyst senior Song Myung-sup says that if sanctions are placed back on Huawei, Samsung could sell 37 million additional smartphones a year. Despite the recent truce in the trade war between the U.S and China, consumers outside China are concerned that the Huawei phone they buy now might not be able to receive Android updates in the future. 

So how bad will Samsung Electronics' preliminary second-quarter earnings be? A consensus of 29 analysts estimates that Samsung will report a 60% drop in operating profits (earnings before interest and taxes) to 6 trillion won, equivalent to $5.14 billion. So despite the decline, there is no need for the company to put up a GoFundMe page. During the same quarter last year, Samsung reported operating profits of 14.9 trillion won ($12.7 billion USD). The drop in operating profits takes place against strong sales of the firm's Galaxy S10 line of smartphones. As we told you earlier this week, shipments of Samsung's current flagship series rose 12% in the quarter compared to deliveries of the Galaxy S9 range made during the same quarter last year.

Samsung has its own trade issues that could cut its production of smartphone displays and chips


DRAM chip pricing will probably not rebound over the remainder of the year predicts TrendForce researcher Avril Wu. TrendForce says that pricing for these chips declined by 25% over the second quarter and predicts a further decline of 15% to 20% during the current quarter that started on Monday and runs through the end of September. Micron Technologies, a U.S. competitor to Samsung in the memory chip business, says that demand for these chips will pick up in the second half of the year, which should bode well for firmer prices later in 2019. But TrendForce's Wu says that Samsung won't be able to clear its inventory of DRAM chips until the first half of next year.


Samsung could also find itself having issues obtaining important supplies needed to produce chips and smartphone displays. Materials that the company sources from Japan to help produce these parts, fluorinated polyimide and resist and high-purity hydrogen fluoride (HF), will require permission from the Japanese government to ship to South Korea starting tomorrow. Obtaining that permission could take as long as 90 days each time it is requested. The countries are arguing over a court ruling made by the South Korean Supreme Court last October. The court ordered that Japan compensate South Koreans who were forced to work for Nippon Steel during World War II. As a result, Samsung could have problems producing enough OLED panels for Apple and its other customers. And the company could lose some memory chip business to rivals as a result.

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13 Comments

2. drunkenjay

Posts: 1700; Member since: Feb 11, 2013

ah so like hongkong and concentration camps of uighurs or even tiananmen square? i heard every foreigner who now enters china will have to install a malware so the ccp can track them.https://www.vice.com/en_us/article/7xgame/at-​chinese-border-tourists-forced-to-install-a-text-s​tealing-piece-of-malware the moment huawei makes its own os, the easier it is for the government to track huawei users. in the us, at least people can protest for their rights. china has no rights.

3. lyndon420

Posts: 6865; Member since: Jul 11, 2012

At least 'leftwing liberals' can protest their rights. Rightwing's not so much...

9. jacky899

Posts: 431; Member since: May 16, 2017

Omg that's another fake news just like the Huawei backdoor thats been on the news for a whole decade but still no real evidence. Regarding the Uighur its all made up. You should read what Edward Snowden leaked. The US was pulling the strings for all the Uigher riots in China as part of the US's terrorist campaigns. Remember ISIS and Alqueda are good examples of secret terrorist groups breast fed by the US to perform acts of terror against enemies of the US. If they never turned on the US, noone would even know the US funded and trained such groups

4. Carlitos

Posts: 680; Member since: Oct 23, 2011

Huawei will fail at making their own OS, should be obvious

5. Donbenie

Posts: 260; Member since: Aug 04, 2013

Am sure you can see into the future of Huawei and their OS..

6. iloveapps

Posts: 909; Member since: Mar 21, 2019

Another Samsung excuse for their lackluster profit. Always looking for something to blame to other OEMs. Anyway, sgodsell would be so sad about this news because its not just that mobile is hitting hard on profit but Samsung’s semiconductor too.

7. strawberry

Posts: 116; Member since: Feb 20, 2019

samsung is big and too big to fall. this is just a tiny drop of water in the ocean.

14. Novage

Posts: 52; Member since: Nov 10, 2015

Yeah like Nokia Oh wait...

10. AlienKiss

Posts: 243; Member since: May 21, 2019

I'm curious who is still interested in buying a huawei spying phone after all of this.. I have issues only thinking of switching from android to iOS and Hua-who thinks that they can release a new os outside china :)) Somebody wake them up. They're effing delusional. Everyone I know owning one is desperately trying to sell theirs without luck. Nobody's interested in their products anymore. Tough luck! Now go cry to your mommy! Samsung is like a continent vs a small island if you compare them. It even makes tanks!

11. mootu

Posts: 1537; Member since: Mar 16, 2017

I know a lot of people who use Huawei / Honor phones here in the UK and none are trying to sell them. Prices on Ebay etc are still the same as they have been all year. The only one crying seems to be you.

12. alanrock

Posts: 326; Member since: Oct 04, 2018

what else he can do?, for 10 years anniversary all he got is new and improved version of the notch ....

13. strawberry

Posts: 116; Member since: Feb 20, 2019

is there any hard evidence of spying?

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