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Samsung’s earnings were likely hit by Huawei but boosted by Apple

Samsung’s earnings were likely hit by Huawei but boosted by Apple

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Photo by Amelia Holowaty Krales / The Verge

Samsung Electronics expects its second-quarter operating profit to have more than halved from a year previously, falling about 56 percent to 6.5 trillion won ($5.56 billion), according to earnings guidance released by the company today. Revenue is projected to slide about 4 percent to 56 trillion won ($47.89 billion).

This would be Samsung’s lowest profit since Q3 2016, when the company was hit by the Galaxy Note 7 debacle. Samsung doesn’t provide full explanations along with its earnings guidance, but analysts suggest the Huawei crackdown could have had a significant impact on Samsung’s critical chip business. On the other hand, it’s also likely to help Samsung’s smartphone sales in certain markets.

Things could have been even worse for Samsung this quarter had it not benefited from a one-off gain in the display division that boosted profit. According to analysts speaking to Reuters, Samsung was reimbursed about 800 billion won ($684 million) by Apple because the US company, which uses Samsung’s OLED screens in its iPhones, missed a sales target that had been agreed upon.