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Chip shares suffer a blow after Samsung warns that the gain could be halved



Semiconductor company stocks suffered from a general weakness on Friday after South Korea-based electronics giant Samsung Electronics Co. had warned that second-quarter earnings could be less than half the previous year.

PHLX Semiconductor Index

SOX, -0.67%

reduced previous losses from 1.6% to 0.7% in afternoon trade, 26 out of 30 components lost to the bottom. The exchange-traded fund VanEck Vectors Semiconductor

SMH, -0.74%

sank 1.7% earlier, but rebounded slightly and fell 0.8, with 22 of 25 components trading lower, reflecting the technology-friendly Nasdaq Composite

COMP, -0.16%

lost 0.2% and the Dow Jones Industrial Average

DJIA, -0.17%

gave 38 points or 0.1%. Read Market Snapshot.

Samsung announced overnight that operating income in the second quarter would decline 56% year-on-year to $ 6.5 trillion ($ 5.6 billion). This is due to weak demand for memory chips, which was worsened by the ongoing US-China trade war. The company expects to publish the results of the final report later this month.

samsung's stock

005930, -0.76%

fell 0.8% in overnight trading.

One of the most active components of the trackers in the chip sector was Qualcomm's stock

QCOM, -0.25%

collapsed by 0.2%.

Qualcomm announced in its latest annual report that Samsung generated more than 10% of its revenue in 2018, 2017, and 2016 On Qualcomm, there are reports that the chipmaker has lost out on its decision to block antitrust enforcement while appealing the decision.

Share of Intel Corp.

INTC, -0.98%

fell 0.9% and was one of the biggest declines in the Dow.

Elsewhere in the chip sector were shares of Advanced Micro Devices Inc.

AMD, + 0.80%

posted a gain of 0.8% after previously losing 1.4% while Micron Technology Inc.

MU, -0.43%

gave up 0.6%, Nvidia Corp.

NVDA, -1.56%

decreased by 1.5%, Applied Materials Inc.

AMAT, -1.49%

lose 1.5% and Marvell Technology Group Ltd.

MRVL, -1.38%

gave up 1.3%.

Micron stated in its latest annual report that it faces "fierce competition" in Samsung's memory and storage markets while Nvidia stated it. Samsung relies on Samsung to manufacture semiconductor wafers.

The chip sector has lately lagged behind the broader market, but still did significantly better this year. The PHLX Semiconductor Index has fallen 1.1% in the last three months, but has still risen 27% since the beginning of the year, while the S & P 500 Index

SPX, -0.21%

has gained 3.3% in the last three months and has grown 19% this year.


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