Samsung Profits Tumble 57%

Joanna Estrada
April 30, 2019

Samsung posted an operating profit of 6.2 trillion won (roughly $5.4 billion) - down from 15.64 trillion won (roughly $13.4 billion) last year - and quarterly revenue of 52.4 trillion won which fell 13.5% in comparison to last year's final quarter.

"First quarter earnings were weighed down by the weakness in memory chips and displays, although the newly launched Galaxy S10 smartphone logged solid sales", said the company in a statement.

The world's top smartphone maker said its mobile business posted a 40% drop in operating profit to 2.3 trillion won in the first quarter.

Samsung's semiconductor business posted revenues of KRW14.47 trillion and operating profits of KRW4.12 trillion in the first quarter of 2019, while the display panel business generated KRW6.12 trillion in revenues and KRW0.56 trillion in operating losses.

Samsung, which supplies screens for its own folding phones, forecast weak second-quarter earnings in the display business as demand for flexible screens was expected to remain weak. But it was confident chip demand would recover later this year, a sentiment echoed by Samsung on Tuesday.

As the biggest manufacturer of memory chips, Samsung has also been impacted by falling demand amongst data-server clients. But memory chips, essentially a commodity that has traditionally followed an up-cycle and down-cycle, is now going through a down-cycle.

It means Samsung's much-awaited foldable device "Galaxy Fold" which didn't really have the triumphant launch the Korean giant may have expected, with cracking screen left and right, may arrive in the later part of the year. Softening demand and fierce competition in the low- and mid-range hit sales and dampened operating profit. The rest of the drop came mostly from phones. Samsung also plans to deliver its first 5G handset this quarter.

Samsung Galaxy S10 majorly derives the rise in Q1 2019 shipments.

DJ Koh, President and CEO of IT & Mobile Communications Division of Samsung Electronics, announces the new Samsung Galaxy Fold smartphone during the Samsung Unpacked event on 20 February 2019 in San Francisco, California.

Samsung will invest 133 trillion won - around $115 billion - into its logic chip businesses such as processors and contract chip making by 2030 to become the market leader.

The last time Samsung profits dipped to this level, the company had issued a global recall of its troubled Galaxy Note 7 after issues with battery temperature.

ZDNet's Adrian Kingsley-Hughes sits down with TechRepublic's Karen Roby to talk about all of the issues with the latest Galaxy foldable phone and what Samsung is doing to solve these problems.

Other reports by Click Lancashire

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