Co. reported a flat net income in the second quarter as a large decline in mobile phone revenue drove down results, supported by its strength in memory chips.
The world's largest mobile phone manufacturer delivers one in five smartphones worldwide. But consumers are keeping their devices longer than before and are shopping at $ 1,000 or more on price tags for new high-end phones.
For the quarter ended June 30, Samsung said its sales in the mobile division, which also includes the telecommunications network owned equipment business, declined by 20% to 24 trillion South Korean won ($ 21
The company, based in Suwon, South Korea, said the total net profit was 11.04 trillion won, compared to 11.05 trillion won a year earlier. Turnover fell from 61 trillion to 58.5 trillion won.
Analysts surveyed by S & P Global Market Intelligence had expected a net profit of 11.1 trillion won for the quarter and a turnover of 58.8 trillion won.
The company's overall results were enough to halt the four quarters with record-breaking profits. The performance was fueled above all by the strong demand for Samsung memory chips, which are used in smartphones, self-driving cars and rival data servers. Samsung has surpassed last year
After Sales, World's Largest Chipmaker
For the current quarter, Samsung's dominance as a memory chip supplier helped cushion the impact of the smartphone fights. Semiconductors accounted for 78% of the company's operating income and increased to 11.61 trillion won, the division's best performance.
With smartphones, sales of Samsung's high-end devices, especially their latest flagship, the Galaxy S9, weakened. Surprised mobile executives, the Wall Street Journal reported earlier this month. The sale of the Galaxy S9, which came on the market in March, could according to analysts, 20% or more below the previous year's model.
The sourcing market has led to increased internal urgency at Samsung's plans for the launch of a flip-phone until early next year. Such a device would create a completely new product category and offer a screen about the size of a tablet that can be folded into a consumer's pocket.
Samsung's handset division is particularly vulnerable to a slowdown in mobile phone sales because it makes the most of its money from selling new devices to consumers. Unlike rivals
Samsung does not have any significant business sales services, such as an app store or streaming music, that can bring in revenue from existing phone users who are upgrading.
The outlook for the upcoming Galaxy Note 9 is not strong, analysts say. In a recent study, Susquehanna analyst Mehdi Hosseini expects that the delivery of the large-screen Galaxy Note 9 will reach only 5 million devices this year. This is a sharp decline from the 12 million Galaxy Note 8 sold last year.
Samsung Electronics, which underwent a 50-to-1 stock split in May, fell 9% this year as investors tightened ask how much endurance the recent memory chip success has.
Write to Timothy W. Martin at [email protected]
Published in the print edition of July 31, 2018 as "Weakness in Mobile Hits Profit at Samsung".