Samsung warns of profit slide after coronavirus slams tech industry

Samsung Electronics warned earnings may decline this quarter after the coronavirus outbreak hurt demand for its smartphones and gadgets, trimming income gained from surging server-chip orders.

South Korea’s largest company reported a 4 per cent slide in net income to 4.9 trillion won (US$4 billion) in the three months ended March. Samsung, which had reported better-than-expected operating profits earlier this month, said the pandemic continued to hammer demand across an array of markets.

The warning from the world’s largest maker of memory chips, smartphones and consumer appliances underscores the uncertainty gripping global industry. As the pandemic spread in the first months of the year, the technology sector took hits from both supply and demand. Samsung joins peers such as Intel Corp in cautioning about the impact of a global economic slowdown.

Samsung “expects the memory business to remain solid, but overall earnings are likely to decline from the previous quarter because Covid-19 will significantly impact demand for several of its core products”, the company said in a statement. “In the second half, uncertainties driven by Covid-19 will persist as the duration and impact of the pandemic remain unknown.”

In particular, Samsung said a drop in smartphone earnings is “inevitable” in the second quarter because of store closings and other factors, while profits would also slip in mobile displays. Executives on a post-earnings conference call refrained from offering guidance on the memory market, but said the company will continue to invest in semiconductor expansion and research.