The Q2 and second-half outlooks that Samsung (SSNLF) just provided weren't especially good. But at a time when many chip stock investors are wagering that demand will improve during the back half of the year, they didn't do much to rock the boat, either.
Samsung's official Q1 numbers were close to the ones it pre-announced in early April: Revenue fell 14% annually to 52.39 trillion won ($45 billion), and operating profit fell by 60% to 6.23 trillion won ($5.4 billion). Mobile device sales fell 6% annually, as strong Galaxy S10 demand was offset by weaker low-end and mid-range phone sales; display panel sales fell 19% amid weak demand for oth smartphone OLED panels and large LCD panels; and memory chip sales fell 34% as DRAM and NAND flash memory prices tumbled.
However, Samsung did forecast its phone sales will rise slightly sequentially, thanks to continued strength for the Galaxy S10, as well as the launch of new A-series mid-range phones. In addition, the company says demand from some memory markets has stabilized in Q2, and -- echoing remarks that rival Micron (MU) made last month -- forecast second-half demand will be strong with the help of favorable seasonal trends.
On its earnings call, Samsung forecast healthier server and mobile DRAM and NAND demand during the second half of the year, with growing sales of higher-density DRAM and NAND chips (a trend aided by price declines) providing a lift. Samsung's full-year outlook for a mid-teens percentage increase in DRAM industry bit demand and a low-30s percentage increase in NAND bit demand isn't far removed from Micron's outlook for low-to-mid teens DRAM demand growth and mid-30s NAND demand growth.Overall, Samsung's comments provide reasons to be cautiously optimistic that the memory industry will fare better during the back half of the year, as Apple ( AAPL) launches new iPhones launch and a cloud capital spending slowdown (and related inventory corrections) comes to an end. Whether or not this scenario plays out has major implications not only for Samsung memory rivals such as Micron, but also for chip equipment suppliers such as KLA-Tencor ( KLAC) and Lam Research ( LRCX) .