Samsung sees profit growth slow in Q2 as competition heats up

Nichole VegaAug 02, 2018

The smartphone market overall has been down this year, with shipments slipping 2.9 percent in the first quarter of 2018 from the same period last year, according to market intelligence firm IDC.

Unnamed sources claim "Samsung is likely to be renewing its budget phone push amid lukewarm sales of its flagship premium phones". ETNews says that this is less than Samsung had planned to sell the phone for. Its screen manufacturing unit said last week its unbreakable, bendable screen had passed U.S. safety testing, a key step towards bringing foldable phones to market.

On the basis of this trend and its unrivalled dominance in several businesses, industry analysts expect Samsung to have a lead on Apple in terms of margin for the entire year. The Galaxy Note9 is scheduled to launch on August 9. In response, Samsung would "seek to expand sales by introducing a new Galaxy Note earlier than usual", it added. Samsung's smartphone revenues, by contrast, plunged 20 percent on-year to W24 trillion, and operating profit nosedived 35 percent to W2.7 trillion. While Samsung is the largest DRAM manufacturer, it has also been benefiting from a favorable product mix, with higher sales of high-density and high-bandwidth products.

Samsung's Memory business posted its strongest ever quarter, with operating profits rising by 44% year-over-year to 11.6 trillion won ($10 billion), driven by continued strength in DRAM demand and pricing.

During the second quarter, Samsung's semiconductor business generated 11.61 trillion won in operating profit, almost 80 percent of the entire operating income.

The disappointment over the second quarter earnings was reflected in mid-morning trade, with Samsung Electronics shares down 0.7 percent.

Samsung Electronics' growth momentum stalled in the second quarter as the lackluster performance of its smartphone and display divisions dragged results down.

Overall, the company reported $13.3 billion in profit, up 6 percent from the same time past year, on $52.1 billion in revenue.

One area of interest that showed positive growth for Samsung was its TV business, which the company credited "a major global soccer event" for the boost in sales. This is more expensive than last year's top-end model but, like the base model, will have double the storage.

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