Samsung Q2 Profit Down, Smartphones Slump

02 August, 2018, 22:03 | Author: Kristen Mcgee
  • The Galaxy A8 was a decent mid-ranger

South Korean tech behemoth Samsung Electronics managed to post an operating profit growth in the second quarter due mainly to brisk chip sales, the company said Tuesday.

Net profit came to 11.04 trillion won ($9.8 billion) in the April-June period, compared with 11.05 trillion won posted a year earlier, Samsung said in its regulatory filing. These bundles are the company's attempt at increasing the sales of the Samsung Galaxy Note 9 as this may be the last one of the series if the device doesn't bring in enough revenue.

Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, said that even though profits fell slightly, Samsung did well overall on the back of OLED displays, memory and storage components. But that means Samsung relies on computer chips for an alarming 78 percent of its operating profit. Revenue for the second quarter tallied 58.48 trillion won, down 4.1 percent on year and 3.4 percent on quarter.

During the second quarter, Samsung's semiconductor business generated 11.61 trillion won in operating profit, almost 80 percent of the entire operating income. The operating profit also fell 4.94 percent on-quarter, which marks the first decline in seven quarters.

As the demand growth is forecast to remain strong in the second half, Samsung predicts the bit growth rates of the memory chips to hover around the middle of the 10 percent range. The division's operating margins also declined to 11% from about 13.5% a year ago on account of higher marketing expenses and weaker premium phone sales.

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He didn't mention the Galaxy Note 9 by name, but it's no secret that we expect that to be the model announced on Aug, 9 at Samsung's Unpacked event.

The IM division's networking business, however, won a solid growth fueled by investment in LTE networks.

It also comes with Samsung's "Make for India" feature- "Chat Over Video", which allows an uninterrupted video viewing experience while chatting.

The chip unit recorded 11.6 trillion won operating profit during the second quarter, higher 45 percent from a year ago and almost 80 percent of its total operating income.

As for the short term, Samsung said that competition would be greater during the second six months of 2018, as new models of smartphones are released, prompting it to launch its new Galaxy Note at an earlier time than normal. Samsung said it will increase the portion of 10-nanometer-class products and the mass production of 5th-generation V-NAND, while addressing demand for high-density server memory and high-bandwidth memory.

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