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Samsung Electronics Co said on Tuesday that it is expecting weaker-than-predicted business results for the first quarter due to a sharp decline in memory chip and panel prices.
The major smartphone maker is scheduled to release its preliminary first-quarter earnings early in April.
“Due to worse-than-expected business conditions, we expect January-March earnings to remain below the market expectations,” Samsung said in a regulatory filing, Yonhap news agency reported.
The world’s largest memory chipmaker said semi-conductors are expected to fall further by larger-than-expected margins due to weak demand, and prices of LCD panels are also struggling amid a supply glut.
Samsung Electronics traded at 45,250 Won on the Seoul bourse as of 11.12 a.m., down 0.55 per cent from the previous session’s close.
The earnings warning came amid weak chip demand from the smartphone market and the protracted trade war between the US and China.
Although sharper-than-expected decline in chips may have dented the tech firm’s bottom line, analysts expect demand and chip prices to rebound in the second half of the year.
South Korean brokerage houses have sharply downgraded the first-quarter earnings forecasts for Samsung Electronics, citing tumbling memory chip prices.
The market consensus of Samsung’s operating profit for the first three months of the year stands at 8.33 trillion Won ($7.36 billion), down about 47 per cent from a year earlier, according to corporate tracker FnGuide.
Analysts further painted a gloomy picture of Samsung’s earnings for the remaining quarters, saying their operating profits are unlikely to rise on-year.
Samsung said earlier that it will propel technology innovations to tackle the unfavourable business environment and foster new growth drivers, such as Artificial Intelligence (AI) and 5G. (IANS)
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The other factor is that the traditional players are very strong in the consumer laptop market. Top 3 players control more than 70 per cent of the market and strong portfolio, distribution, and channel reach as well as brand marketing has helped them massively. "New brands can surely make a dent in the consumer laptop market but are challenged by supply issues right now. Watch out for them in 2022 as and when supply situation eases up," Navkendar Singh, Research Director, Client Devices & IPDS, IDC India told IANS.
Dominated by HP Inc, Lenovo and Dell, the traditional PC market (inclusive of desktops, notebooks, and workstations) in India continued to be robust as the shipments grew by 50.5 per cent year-over-year (YoY) in the second quarter (Q2), according to IDC. Notebook PCs continue to hold more than three-fourth share in the overall category and grew 49.9 per cent YoY in 2Q21, reporting a fourth consecutive quarter with over 2 million units. Desktops also indicated a recovery as shipments grew 52.3 per cent YoY after recording the lowest shipments of the decade in 2Q20.
According to Prabhu Ram, Head, Industry Intelligence Group, CMR, driven by the pandemic and the associated accelerated pivot to remote work, learn and unwind culture, PCs have been witnessing heightened demand. "Despite the current supply chain constraints, PCs are here to stay in the new never normal. In the run-up to the festive season, established PC market leaders will continue to leverage their brand salience and gain market share," Ram told IANS.
HP maintained its lead in the India PC market with a 33.6 per cent share as its shipments grew 54.2 per cent annually. Dell Technologies continued to hold the second position with a 22.1 per cent share and an impressive 86.1 per cent YoY growth in 2Q21. Lenovo maintained the third position with a share of 17.8 per cent in 2Q21.
Arvind Suraj, Research Fellow, Jawaharlal Nehru University (JNU), said that there is always a trust issue with new brands. "You won't buy a laptop in 6 or 7 months just like smartphones. In this case, we often go for existing players. Brands like Lenovo, HP, ASUS and Acer have already gained our trust," he said. (IANS/ MBI)
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