Things aren’t as bright and shiny as they used to be for Samsung. The Korean electronics giant announced the second quarter 2019 financial results on Wednesday, with most metrics going into the red. The company reported consolidated quarterly revenue of KRW 56.13 trillion ($47 billion) and quarterly operating profit of KRW 6.6 trillion ($5.5 billion). These profits are off by 56% compared to Q2 2018.
The company said that price declines in the memory chip market due to inventory adjustments by major data center customers was the primary reason for the profit decline. Also, the slower sales of iPhones affected the company’s business as Samsung supplies parts for Apple’s iPhone. Well, that is two major electronic companies affected by slowing sales of one device. Just goes on to show the impact iPhone has on multiple businesses.
Samsung had issued a warning for its investors in Q1 quoting the prices dip of memory chips and lower demand for screens.
Samsung Electronics noted an increase in sales of appliance products, refrigerators, and washing machines. But the profits from televisions fell compared to the previous year’s Q2 due to “intensifying competition.”
Even though the company didn’t mention it, the ongoing trade war between Japan and South Korea has affected its business. Earlier this month, Japan tightened control over technology-related trade to South Korea for “national security” reasons. This poses a restriction on the export of raw materials required for the manufacturing of chips and displays for smartphones and televisions. Samsung is among the top importers of these materials, thus it too was affected by this move by Japan to some extent.
Samsungs’s smartphone division noted a strong increment in the sales of the new Galaxy A Series which includes the Galaxy A50 and A70. Though, sales for flagship models like Galaxy S10 fell. The company blames increased costs due to growing competition in the mid- to low- end segment and inventory adjustments of older models for this profit drop in smartphone sales.
The company looks forward to making a profit from the 5G rollout in Q3. Samsung said that it has great expectations from the sales of Galaxy Note 10 and Galaxy Fold in the third quarter. The company also promised a new and improved Galaxy A series smartphones. The A series has been a hit, specially in the price-conscious Indian market.
“As competition in the smartphone market is seen increasing in the second half, Samsung plans to enhance its product lineup and expand sales of new mass-market models. The Network Business will prioritize building the foundation for its global 5G business expansion,” the company said in a press release.
