Samsung Electronics said Tuesday morning it expects first quarter earnings to come below market expectations due to weakness in its display and memory businesses.
In a regulatory filing, the world's largest smartphone maker said it predicted a bigger-than-expected price decline for major memory products due to seasonal weakness in demand. Those components are used in mobile handsets and enterprise servers.
In January, the South Korean tech giant had also issued a similar warning for the previous quarter's earnings — operating profit for the three months ended December was 10.8 trillion Korean won (about $9.67 billion), down more than 28 percent from a year ago, and around 18 percent less than analysts' predictions.
Analysts have said that data center companies buying memory chips from Samsung and other chipmakers have slowed down their orders in recent months, following a period of aggressive growth. Meanwhile, a slowdown in smartphone sales has also affected Samsung's memory chip sales.
The overall semiconductor market declined 10.2 percent in the fourth quarter of 2018, according to a note from IHS Markit earlier this month.
"The semiconductor sector is going through a stage of inventory adjustment, especially for the distribution channels," analysts at Citi wrote in a note last week. They added that growth rates of semiconductor sales and exports in Asia have fallen sharply since mid-2018 amid U.S.-China trade tensions, an economic slowdown in China, weaker-than-expected replacement demand for smartphones and a drop in memory chip price.