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December 06, 2019

Samsung’s Q2 operating profit more than halves on falling chip prices

PUBLISHED : July 31, 2019 - 12:30

UPDATED : July 31, 2019 - 12:30

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Samsung Electronics’ operating profit plunged 55.6 percent on-year in the April-July period to 5.18 trillion won ($4.4 billion) due mainly to weak memory chip prices, according to the firm’s second-quarter earnings report released on July 31.

The tech giant’s revenue in the second quarter came in at 56.1 trillion won, down 4 percent from a year earlier. 




The company said the price decline of memory chips and relatively low demand in the chip market due to inventory adjustments by major datacenter operators are some of the reasons behind the profit drop.

The semiconductors business saw its operating profit slide a whopping 71 percent from 11.6 trillion won to 3.4 trillion won -- the lowest since the second quarter of 2016 when the firm posted 2.64 trillion won.

The mobile business also struggled due to the lower-than-expected sales of Samsung’s flagship smartphones, including the Galaxy S10 and Galaxy Note 9, and increased marketing costs. The mobile unit posted 1.6 trillion won in operating income, down from 2.7 trillion won a year earlier, continuing the downward trend since the second quarter of 2016.

The home appliance posted 710 billion won in operating profit, up from 510 billion won, thanks to seasonal factors and the growing demand for high-end TVs.

In the conference call held in the morning, the tech giant touched upon the upcoming Galaxy Note 10 and foldable smartphone Galaxy Fold, saying the company will try to expand the foldable lineup and offer intuitive mobile experience with the new Galaxy smartphones.

“Regarding the Note 10, the company forecasts that the sales figure would surpass that of the Note 9,” said a Samsung executive, participating in the conference call.

Samsung also said it would come up with various measures to respond to uncertainties arising from the ongoing trade spat between South Korea and Japan. It kept quiet, however, about detailed plans to maintain a stable supply of chemicals for chip manufacturing from Japan, and the current level of inventory of the materials.

By Kim Young-won (wone0102@heraldcorp.com)

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