US chipmakers slide after Samsung announces its profit tanked 56% last quarter

Associated Press

The world’s largest smartphone maker is pulling down US semiconductor stocks.

Samsung on Friday reported a 56% year-over-year decline in operating profits in the second quarter of 2019 to 6.5 trillion won, or $US5.5 billion. Profits came in just above analyst expectations of 6 trillion won.

Samsung’s business has been hurt by the trade war between the US and China, and sanctions against one of its customers, Huawei, a Chinese telecommunications giant. The trade war has dragged down demand for memory chips, which is Samsung’s core profit-generating business segment.



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Qualcomm was down as much as 2% in early trading on Friday. The chipmaker was also trading lower after a US judge blocked its motion to delay an antitrust ruling. Micron Technology fell as much as 1%. AMD also dropped as much as 0.8%.

According to Samsung, one-off gains in its display division, which counts Apple as a customer, were included in operating profit. Apple paid Samsung a reimbursement worth 800 billion won because the company missed a previously set sales target, Reuters reported.

Despite the impact from the trade war, semiconductor stocks are still outperforming the broader market this year. The iShares Semiconductor ETF, which tracks a basket of chip manufacturers, is up as much as 27% this year, compared the S&P 500’s 19% gain.

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