Samsung profit misses estimates as growth stalls in smartphones

Pauline Obrien
August 2, 2018

But Samsung said it "expects sustained strength in the memory market and growing demand for flexible OLED panels to drive earnings higher in the second half". Samsung is looking to bolster the business with new launches including the new Galaxy Note 9, which is expected to be released a few weeks ahead of schedule, and a new device with a foldable screen, which could launch early next year. With many excellent handsets now available for several hundred dollars less than its flagships, Samsung is feeling the effects of consumers opting for cheaper models.

Samsung faces an uphill battle against Apple in tablet sales, however. Demand for DRAM is being driven by higher memory content in devices such as smartphones and a higher uptake from the server market.

Samsung Electronics, which is an Apple Inc components supplier and smartphone rival, stated that operating profit from the mobile business recorded its steepest rate of decline since the first quarter of previous year, with cheaper Chinese-made handsets putting pressure on margins.

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Samsung is also hoping to turnaround its mobile communications business with new models coming later this year, starting with the Galaxy Note9 phablet, set to be unveiled on August 9. Revenue for the second quarter tallied 58.48 trillion won, down 4.1 percent on year and 3.4 percent on quarter.

Local analysts estimate the second-quarter shipment of the Galaxy S9 at 8 million units, with the combined sales of 2018 reaching 28 million units.

The company said the new Note smartphone, which has often been the most expensive phone model from Samsung, would be sold for "a reasonable price" this time.

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Amid the stagnant high-end smartphone market, Samsung reported a drop in earnings, both year-on-year and quarter-on-quarter, over slow sales of the Galaxy S9 and S9+ premium smartphones. The Samsung rival already uses the OLED panels in the iPhone X and two new phones are expected from Tim Cook's team later in the year.

Samsung then said it is preparing the release of micro LED TVs customized for businesses and households, respectively. Samsung, while still the world's largest smartphone maker, saw its shipments down 2.4 percent in the first quarter, IDC reported in May. By segment, the chip business accounted for 6.1 trillion won, followed by the display division with 1.1 trillion won. The mobile business booked 2.7 trillion won in quarterly operating profit.

It brought the total spent in the first half to 16.6 trillion won (14.8 billion USA dollars).

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Samsung shares decreased 0.3 percent, compared with the flat broader market.

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