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Samsung's profits continue to slip

Samsung's profits continue to slip


Chips are up, phones are down

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Samsung Electronics made an operating profit of 5.29 trillion won ($4.87 billion) off the back of 52.73 trillion won ($48.6 billion) in revenue last quarter. These are big numbers by almost anyone's standards, but the problem is that they don't meet the company's own; last year operating profit was 8.31 trillion won from 59.28 trillion won revenue, meaning that these latest results reveal respective dips of 36 and 11 percent.

"new materials, innovative design" for upcoming phones

Although Samsung points to increased sales of the Galaxy Note 4 as a bright spot, its mobile division is still down 64 percent year-on-year in terms of operating profit, leaving others like the processor and RAM businesses to pick up some slack. All indications are that 2015 will see Samsung rely on its own chips more than ever; the next Galaxy flagship is expected to use a Samsung processor in the US and elsewhere, as opposed to the Qualcomm Snapdragon parts typically found in LTE markets.

Samsung expects its mobile division to grow in 2015, with emerging markets like China and India and the continued global rollout of LTE highlighted as targets. The company says it will use "new materials, innovative design, and differentiated features" in its upcoming products. Samsung also promises a "diversified" wearables lineup with "unique designs." Some of these products may appear at Mobile World Congress in just over a month's time.

But Xiaomi has overtaken Samsung in China, and Apple's record-breaking profits show its clear leadership in the premium segment of the market. Samsung's issue has been apparent for some time now; it's hard to outmaneuver the high-spec, low-price combinations from more nimble competitors like Xiaomi in emerging markets, and the appetite for Samsung's expensive Android phones in the developed world appears to be shrinking. 2015 will be a critical year for the company's mobile division.