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Samsung 2Q profit halves as DRAM prices sink

South Korean tech giant gains little from Huawei's lingering US problems

South Korean analysts estimate that operating profit for Samsung's semiconductor business fell 70%.(Photo courtesy of the company)

SEOUL -- Samsung Electronics said on Friday that operating profit fell to 6.5 trillion won ($5.56 billion) in the quarter ended June, falling 56% year on year in the face of sinking DRAM prices.

The South Korean maker received only limited tail winds from the U.S. ban on Chinese smartphone rival Huawei Technologies, with operating profit dropping 60% in the quarter ended March.

Samsung's share price slipped about 1.0% after the announcement.

Revenue totaled 56 trillion won in the April-June quarter, a decline of 4%. The company will announce net income and divisional profit for the period at the end of July.

Operating profit showed a year-on-year decline for the fifth consecutive quarter.

South Korean analysts estimate that operating profit of the company's semiconductor business unit, which mainly produces DRAM, would be around 3.3 trillion won, a steep 70% drop from the previous year.

Performance was hit mainly by plummeting DRAM and NAND prices, which fell nearly 50% compared to last year.

Samsung does not disclose profit and loss for each term, but observers feel that NAND chips fell into the red.

The company's information technology and mobile unit also fared poorly, with operating profit estimated to be about 2 trillion won, as sales of the recently launched Galaxy S10 smartphone slowed.

U.K. chip designer Arm stopped working with Huawei after the U.S. blacklisted the Chinese tech giant over security concerns. But the expected boost this was supposed to have given Samsung never fully materialized.

Samsung's smartphone shipments might have risen in the April-June quarter, but much of this could have been comprised of models with lower profit margins. Also, rising marketing costs may have further dented results.

Samsung's display business saw its profit rise, due in part to a one-time deal with Apple for OLED panels.

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