South Korean tech giant Samsung Electronics is expected to post a loss in its chip business unit for the first quarter of this year. The continued decline in demand for consumer electronics products due to several unfavorable factors has caused a significant impact on the memory chip business of Samsung Electronics, which is an important source of profit for the company. The operating profit of the equipment solutions department, where the chip business is located, has also sharply fallen year-on-year and month-on-month.
Analysts Predict Losses in Samsung Electronics' Chip Business Unit
As the decline in demand for consumer electronics products continues, Samsung Electronics' memory chip business is facing increasing performance pressure. Analysts predict that the company's chip business unit may suffer losses in the first quarter of this year. Specifically, an analyst in South Korea expects the chip business to post a loss of 3.3 trillion won, which is approximately 2.5 billion U.S. dollars.
Loss in Chip Business for the First Time Since 2009
The device solutions division of Samsung Electronics' chip business is expected to suffer losses in the first quarter of this year after 14 years. The last time the company posted a loss in this division was in the first quarter of 2009.
Decline in Shipments of DRAM and NAND Flash Memory
Shipments of dynamic random-access memory (DRAM) and NAND flash memory in Samsung Electronics' chip business are expected to decline by 13% and 12%, respectively, in the first quarter. Profits in the foundry business are also expected to decline due to slowing demand.
Impact on Equipment Solution Department
The chip business of Samsung Electronics accounts for a significant proportion of the revenue of the equipment solution department. In the third and fourth quarters of last year, the chip business contributed to over 50% of the department's revenue. Therefore, the loss in the chip business is expected to have a significant impact on the equipment solution department.
Expected Loss in Device Solutions Division
In addition to the chip business, the device solutions division of Samsung Electronics is also expected to post a loss in the first quarter of this year. An analyst in South Korea expects an operating loss of 4.1 trillion won in this division, which is higher than the expected loss in the chip business.
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