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Samsung’s profit cut in half on slow sales of memory and flagship phones

Samsung’s profit cut in half on slow sales of memory and flagship phones


The Galaxy S10’s sales momentum is ‘weak’

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Photo by Amelia Holowaty Krales / The Verge

Samsung Electronics has released second-quarter earnings results in line with its prior guidance, which is to say that they are not great. Operating profit fell 56 percent year-on-year to 6.6 trillion won — the lowest since the company had to deal with the fallout from the 2016 Galaxy Note 7 fire risk — while revenue slid 4 percent to 56.13 trillion won.

Samsung puts its troubles largely down to weak market conditions for its all-important semiconductor business, despite a slight bump in demand for memory. The situation is expected to improve somewhat in the second half of the year, though Samsung is warning of “external uncertainties,” likely a reference to the implications of various international trade disputes.

While revenue was up 8 percent at Samsung’s mobile division, profit was down 42 percent year on year. Samsung says that overall phone shipments increased, with strong sales for mid-range models like the Galaxy A50 and A70, but the flagship (and more profitable) Galaxy S10 experienced “weak sales momentum” during the quarter.

Samsung hopes the upcoming launches of the Galaxy Fold and the Galaxy Note 10 will help its premium smartphone sales, and the company also plans to release “more competitive A-series models” in the second half of this year. The display business, meanwhile, is expected to improve its performance with higher shipments of OLED displays, with Samsung believing that phone manufacturers will opt for thinner panels to mitigate the design constraints of 5G devices.