Shares of US chip makers are down after Samsung announces 56% profit cut

Shares of US chip makers are down after Samsung announces 56% profit cut

Chip stocks fried after Samsung warned Q2 profits would fall over 50%

Description video:
Samsung’s warning sinks chips. With CNBC’s Deirdre Bosa and Melissa Lee, and the Fast Money traders, Steve Grasso, Mark Tepper and Tim Seymour.

Shares of US chip makers are down after Samsung announces 56% profit cutShares of US chip makers are down after Samsung announces 56% profit cut

Samsung on Friday reported a 56% drop in Q2 2019 operating profit to 6.5 trillion won, or $ 5.5 billion. Profit slightly above analysts’ expected 6 trillion won.

Samsung’s business has been hit by the U.S.-China trade war, as well as sanctions against one of its clients, Huawei, the Chinese telecommunications giant. The trade war has led to a decrease in demand for memory chips, which are Samsung’s main profitable business segment.

Qualcomm shares fell 2% in early trading on Friday. The chipmaker traded in the red amid court rulings in antimonopoly proceedings. Micron Technology Quotes Down 1%, AMD Shares Also Down 0.8%.

According to Samsung, operating income includes one-off benefits in the display segment of which Apple is a customer. Apple paid Samsung 800 billion won in compensation as the company did not reach its previously set sales target, Reuters reported..

Despite the impact of the trade war, semiconductor inventories are still outstripping open market demand this year.Shares of US chip makers are down after Samsung announces 56% profit cut IShares Semiconductor ETF, which tracks the number of chips produced, is up 27% this year, up from a 19% rise in S&P 500.