Samsung tips record first-quarter profit as chip boom winds down

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SEOUL (Reuters) – Samsung Electronics Co Ltd tipped a surprise record first-quarter profit on Friday but market reaction was muted due to growing concerns that the semiconductor boom that has driven the South Korean tech giant’s earnings is about to end.

Samsung shares fell after the announcement as analysts forecast similar or lower profit in the second quarter, due to slower growth in DRAM chip prices and higher marketing costs for the flagship Galaxy S9 smartphone.“Even if profits start falling in the second half, Samsung will have a strong balance sheet this year,” said Song Myung-sup, analyst at HI Investment & Securities, predicting looser supply of DRAM chips to start driving down prices.

The global semiconductor leader and Apple Inc smartphone rival forecast January-March profit to leap 57.6 percent from a year earlier to 15.6 trillion won ($14.7 billion), beating an average forecast of 14.5 trillion won from a Thomson Reuters survey of 21 analysts

Revenue for the quarter was tipped to rise 18.7 percent to 60 trillion won, Samsung said in a regulatory filing. The company did not elaborate on its performance and will disclose detailed earnings in late April.Samsung shares fell as much as 2.7 percent on Friday before paring losses to fall 0.7 percent as of 0345 GMT, compared to a 0.4 percent drop in the wider market.

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