Samsung Warns of Weak Chip Demand

South Korea's Samsung Electronics warned of weak semiconductor demand as it cut its fourth quarter profit outlook significantly.

Samsung said in a statement that the company expects earnings to remain subdued in the first quarter of this year due to difficult memory conditions brought on by weaker than expected demand from data center customers.

Samsung said Tuesday it expects its total sales for the fourth quarter of 2018 to fall to about 59 trillion Korean won (about $52.7 billion), down from 65.98 trillion won (about $58.9 billion) in the fourth quarter of 2017. The company expects its fourth quarter profit to fall to about 10.8 trillion won (about $9.6 billion), a decline of about 30% compared to the fourth quarter of 2017.

Samsung's profit warning is the latest sign that the memory chip market is headed for a downturn after two straight boom years. Fellow memory chip supplier Micron Technology said last month it expects its quarterly revenue to decline significantly due to "weak near-term supply-demand dynamics.”

Market research firm IC Insights recently predicted that industry-wide DRAM sales would decline about 1% this year after growing by 77% in 2017 and an estimated 39% in 2018. The NAND memory market has been in oversupply since the start of last year, with the average selling price of NAND chips falling continuously throughout the year.