The news doesn't come as a surprise, though, because back on March 26 the company issued a press release stating that Q1 results are expected to come in below expectations due to worse-than-expected conditions in the display and memory markets. In regard to memory specifically -- SSNLF's largest revenue generator -- the company commented that price declines were likely to exceed previous estimates amid overall weak seasonal demand.
That day, shares of AAPL and MU traded moderately lower. In fact, both of those stocks had been weak in the couple of days that preceded the Samsung news. So, with that said, we wouldn't expect SSNLF's downside guidance to have a major impact on AAPL or other chip stocks today because investors are already anticipating soft results for the Q1 period. On that note, SSNLF closed with a very minor loss on the Korean stock market.
After a prolonged boom period for memory chip makers, conditions have deteriorated significantly over the past few quarters, causing companies like SSNLF, MU, QCOM, AVGO, and others to significantly cut back on production. A primary culprit facing the industry has been declining smartphone demand in China as macroeconomic worries have dented the economic climate. To put this into perspective, AAPL's revenue in China dove by 27% last quarter.
While the market was going strong, chip makers hit the accelerator, flooding the market with supply. Then when the smartphone market in China turned south, this created a supply and demand imbalance that has sent memory prices spiraling lower. DRAMeXchange recently reported that DRAM chip prices have sunk by more than 20% on average during Q1.
This issue is well-known, though, so what investors are focused on is the back half of 2019. Several chip makers have offered encouraging commentary regarding their outlooks for 2H19 -- including SSNLF. Only about a week ago, the company stated that it still expects a turnaround for memory products in 2H19, with improved demand for OLED panels as well.
When MU reported earnings on March 20, it also said that DRAM bit shipments should accelerate in Q3, forecasting industry bit growth in the mid-to-high teens.
Broadcom (AVGO) also expressed a lot of optimism for its wireless segment during its last earnings call on March 15, which enabled it to reaffirm its FY19 guidance. Its statement that it sees "meaningful growth" for its wireless business in 2H19 is what really caught investors' attention and catalyzed for the stock.
A couple key catalysts are expected to revive SSNLF's growth. First, it just rolled out its new Galaxy S10 5G smartphone, with a foldable screen. At this point, 5G phones won't translate into a major near-term growth catalyst for the company since the technology isn't built out in many major markets yet. However, looking out to late 2019 and into 2020, SSNLF should be poised to capitalize as more markets transition to 5G. Additionally, AAPL will be launching its latest iPhone likely sometime this fall, and it could announce plans for its own 5G phone in that same time-frame.