The US ban on Huawei has far-reaching effects
While Chinese company Huawei has definitely taken a financial hit following their placement in the US trade blacklist, other companies are suffering from it too.
And while Korean electronics juggernaut Samsung competes with Huawei on the world stage with smartphones, it’s also one of Huawei’s biggest trading partner in terms of phone components.
Samsung manufactures DRAM and NAND memory chips for a majority of clients, including Huawei, and this particular subset of their business actually brings in two-thirds of the profit for the company. But since Huawei has cut its smartphone production following the trade ban, the company is struggling to find new buyers for their components, and have been cutting prices in the process.
Chip prices have been pretty low in the previous months, down as much as 25% in Q2. This has likely hurt Samsung’s bottom line, and Refinitiv SmartEstimate predicts that the company will post an operating profit of $5.14 billion, which is a 60% decline compared to last year.