ibusinesslines.com August 20, 2018

Samsung Electronics' net profit down 0.09 pct in Q2

02 August 2018, 12:01 | Jodi Jackson

Samsung's mobile woes drag on profit growth

Galaxy A

A sluggish market for premium mobile phones and stiff competition contributed to a decline in Samsung's smartphone shipments and revenue compared to the previous quarter, denting demand for its flagship Galaxy device, the South Korean company said.

While the company's memory chip business is doing well, sales of its flagship Galaxy S9 smartphone and display panels are slipping after the company saw huge profit growth in 2017.

The world's biggest chip and smartphone maker said operating profit rose 5.7 percent to 14.9 trillion won ($13.3 billion) in the second quarter, slightly ahead of its 14.8 trillion won estimate.

But total sales fell 4.1 percent year-on-year to 58.48 trillion won, with the company's consumer electronics and mobile businesses suffering.

It was Samsung's slowest profit growth for the company in more than a year. During the second quarter, its semiconductor business generated 11.61 trillion won ($10.39 billion) in operating profit, almost 80 per cent of the entire operating income.

Samsung said its flexible OLED technology - which it has been developing for nearly five years - would help the technology firm to rebound in the second half of the year.

To cope with the situation, Samsung Electronics said it will soon release a new Note smartphone at a "reasonable price", and apply top-notch features on budget models. Granted the company is still making a profit, but its growth is down overall and its growth that investors are most after.

Samsung bills the Galaxy Tab S4 as an Android 8.1 Oreo tablet that can transform into a PC-like device when needed.

This is the first time Samsung DeX - which allows the Galaxy S8, Galaxy S9, and Galaxy Note 8 smartphones to be connected to a keyboard, monitor, and mouse to become a "desktop" - is available on a tablet. According to Samsung, the device is not performing well in the market as its sales margin is low.

For the second half of 2018, he admitted that "new model launches and intense price competition in the mobile business are likely to keep conditions challenging".

It was driven by demand for DRAM chips used in data centers and NAND flash memory for high-capacity storage, said Samsung that focused on value-added products such as 64GB and higher-density server DRAM based on the 1X nanometer technology and 128GB and higher for NAND mobile storage.

Samsung faces an uphill battle against Apple in tablet sales, however. "Its third-quarter operating profit is expected to hit 16.8 trillion won", said Lee Seung-woo at Eugene Investment & Securities.

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