Slumping Galaxy sales lead to weak Samsung earnings

James Marshall
August 2, 2018

Samsung's display business has also suffered somewhat in this quarter with "weak demand" for the flexible OLED panels which were seen in phones like iPhone X, and due to the decrease in LCD shipments both in terms of quantity and price.

The consumer electronics division, including the visual display and digital appliances businesses, posted 10.4 trillion won in sales and 510 billion won in operating profit for the second quarter.

Samsung posted its slowest quarterly profit growth in more than a year today (31 July).

Operating profit from Samsung's mobile business saw its steepest rate of decline since Q1 2017, as cheaper handsets put increased pressure on its margins.

"Second quarter revenue fell due to softer sales of smartphones and display panels", Samsung said in a statement. The latest device from Samsung to get a price cut is Galaxy J6.

Sales of its first-half flagship Galaxy S9 and S9+ models were slow, the company said. Apple, on the other hand, does not have any chip foundries present where it will be able to generate a hefty profit from, and the fact that the bulk of its profits come from smartphone sales alone is a very impressive feat. The new Note will be launched in early August. Although it doesn't break out divisional revenues in fine detail, the company said its semiconductor business unit, responsible for DRAM and NAND flash, enjoyed strong results thanks to demand for its DRAM in data-center applications and NAND for high-capacity solid-state storage, even as prices for flash memory devices have begun to fall.

Samsung has successfully managed to displace Xiaomi and regain the top spot in India's smartphone market. A big feature for these types of devices is battery size and Samsung has been able to fit in a 7,300mAh capacity battery inside the 2018 Galaxy Tab A 10.5.

Samsung shares were down 0.5 percent in early trading, compared with 0.2 percent drop in the broader market.

Though reports have hinted at 512GB storage variant for Samsung Galaxy Note 9, an 8GB RAM variant was unheard of so far.

The official leak comes a week before Samsung's much hyped NY event, where the company is expected to unveil a new Galaxy Note smartphone and had been tipped to launch tablets, a smartwatch, and potentially its first smart speaker. Holger Mueller of Constellation Research Inc. said the company had delivered an excellent quarter considering that its leadership is still in transition, especially when one considers that its previous, stronger quarters were more of a positive surprise.

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