By Joyce Lee and Heekyong Yang

SEOUL (Reuters) – Samsung Electronics (OTC:) Co Ltd flagged a gradual restoration for chips within the second half of the 12 months after its semiconductor enterprise reported a document loss on Thursday, pushed by weak demand for tech gadgets.

A world downturn in semiconductor purchases amid an financial slowdown and weak buyer spending despatched chip costs plummeting within the first quarter, triggering manufacturing cuts throughout the sector.

Samsung (KS:) stated its chip enterprise would concentrate on high-capacity server and cell merchandise “primarily based on expectations of a gradual market restoration and a rebound in world demand” within the second half.

For the present quarter, Samsung stated it anticipated restricted restoration for reminiscence chips as main information centre corporations invested extra conservatively in servers.

The world’s greatest reminiscence chipmaker stated working revenue fell to 640 billion gained ($478.6 million) for the January-March quarter, down 95% from 14.12 trillion gained a 12 months earlier and the bottom revenue for any quarter in 14 years. Income fell 18% to 63.7 trillion gained.

The South Korean tech large’s chip division – usually its most dependable money cow – reported a 4.58 trillion gained loss in comparison with a 8.45 trillion gained revenue a 12 months earlier.

Buyers around the globe have in the reduction of on purchases on account of rising inflation. Consequently, smartphone, private pc and server corporations have run down inventories, inflicting chip costs to plunge by about 70% over the earlier 9 months.

Samsung made a uncommon announcement of a chip manufacturing reduce earlier this month, becoming a member of smaller rivals.

Though this might assist chip costs recuperate barely, analysts stated Samsung’s revenue within the present quarter could also be just like Q1 and not using a elementary restoration in demand for gadgets that use chips.

BUY CHIPS AGAIN

By the second half of the 12 months, prospects could have run down stock and steadily begin shopping for chips once more, Samsung stated.

Regardless of the document loss in chips, Samsung stated it spent 10.7 trillion gained in capital expenditures throughout Q1, the best for the primary quarter of any 12 months.

Out of that, 9.8 trillion gained was spent on chips as Samsung units up manufacturing in its Taylor, Texas and Pyeongtaek, South Korea factories.

“Samsung Electronics will proceed to put money into reminiscence semiconductors at an identical stage to the earlier 12 months … to safe mid- to long-term competitiveness,” it stated.

Samsung’s cell enterprise was a brighter spot, reporting 3.94 trillion gained revenue in Q1, up from 3.82 trillion gained a 12 months earlier.

“Samsung is specializing in revenue quite than shipments” because it meets extra resilient demand for premium smartphones quite than quantity, stated Jene Park, senior analyst at Counterpoint.

Within the second half, Samsung forecast the smartphone market would enhance in each shipments and income as the worldwide financial system recovers.

Shares in Samsung fell 0.5% in morning commerce, according to the broader market.

Samsung shares have risen about 16% year-to-date as traders anticipate a reminiscence chip restoration within the second half of this 12 months.

($1 = 1,337.3800 gained)