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sharp drop in profits and good sales of Galaxy S10

  • The Galaxy S10 sells excellently, but the demand for last year's flagships has dropped more than ever due to the popularity of the new mid-range smartphones.
  • The main problems are due to a decline in memory demand.
  • Conclusions from financial results of other divisions.
  • The Galaxy Fold release date will be announced in a matter of weeks – probably in the second half of the year.
  • Some predictions for the future

Samsung Electronics has previously warned investors that this quarter will earn much less money, and now the company reported financial results in the first quarter. The semiconductor giant's profits fell by two and a half times from 15.64 trillion victories (about $ 13.4 billion) to just 6.2 trillion victories (about $ 5.3 billion) compared to the same period last year.

It is worth noting that Samsung's total revenue for the quarter was $ 52.4 trillion ($ 45.2 billion), which means that it dropped significantly compared to the first quarter of 2018, when the company's total revenue was $ 60.6 trillion ($ 52). , 2 billion).

Unlike Google, however, the company does not blame its flagship smartphones for damage – Samsung says the Galaxy S10 is really selling well. During this quarter, the company was able to implement a total of 78 million phones and an additional 5 million tablets and the not very impressive sales results for the quarter are explained by the fact that middle-level models consume some of last year's Galaxy sales.

This is logical, as Samsung's new mobile phone strategy offers state-of-the-art features in mid-range environments, such as the new A line. Samsung also plans to sell slightly more phones in the second quarter of this year than in the first quarter. Mobile unit sales fell slightly while profit fell 1.7 times. The company explains this by increasing competition and a general decline in demand on the smartphone market.

But mainly, the company explains its major gains in reducing profits by the same factor as in the previous quarter: a decline in demand for memory chips, which account for most of Samsung's revenue, inventory management and demand for displays. The company said the situation should improve in the second half of the year, with growing demand for flash memory for servers, as well as for smartphones with 256 GB or more. The demand for spacious memory chips is already growing at the expense of flag smartphones.

The company said that its semiconductor business is showing revenue growth as a result of an increase in the range of modems and processors for smartphones. The network shop feels good by launching 5G networks in Korea. The display panel division has shown slight losses due to lower demand for flexible screens and market growth for large panel suppliers. At the same time, the sale of high-end TVs (QLED and very large diagonal solutions) enabled the Consumer Electronics division to grow.

In the current second quarter, Samsung expects a limited improvement in the memory chip market as demand is expected to improve in areas such as mobile electronics. However, prices will continue to fall. Demand for mobile processors and CMOS is growing and Samsung is also expecting increased demand for conventional inflexible panels.

Initially, Samsung did not mention its deferred folding Galaxy Fold, but then responded to the journalists' request, stating that it would announce an updated launch plan in the next few weeks. Maybe an advanced unit will enter the market in the second half of the year, depending on how you interpret the following passage of the press release:

"In the second half of the year, despite increased competition in the market, Samsung." expects to increase smartphone sales with new models in all Galaxy segments AND to the galaxy Note as a result of seasonal growth in demand. In the flagship segment, the company will strengthen its leadership with the new galaxy Noteas well as innovative products like 5Gsolutions and composing smartphones.

More generally, the company predicts that the increased demand for flexible screens can help its display business with unnamed new smartphones planned for release. However, the company also believes that the demand for flexible displays may currently be relatively weak. Now he's betting on common screens.

Samsung believes that demand for memory chips will recover in the second half of the year, although some external uncertainty will remain. Competition in advanced TV and smartphone markets is expected to increase in the second half of the year, creating problems for the company – in response, the Korean manufacturer will focus on cutting-edge equipment.

In the medium and long term, Samsung seeks to improve the competitiveness of key areas by diversifying areas and introducing innovations in device components and formats. Samsung continues to expand its automotive capabilities with HARMAN and AI solutions.

In the quarter under review, Samsung Electronics's capital expenditures amounted to 4.5 trillion won ($ 3.9 billion) and the company invested $ 3.6 trillion won ($ 3.1 billion) in semiconductor manufacturing and 0.3 trillion won ($ 0.26). billion). – in the production of screens.

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