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Samsung's profit drops 56% due to slow sales of memory and flagship phones

By Cookie Monster - on 1 Aug 2019, 12:36am

Samsung's profit drops 56% due to slow sales of memory and flagship phones

Samsung just released its second-quarter earning results which saw its operating profit at a record low since 2016.

According to the South Korean company, its operating profit dropped 56% year-on-year to 6.6 trillion won while revenue decreased 4% to 56.13 trillion won. This is actually the lowest since 2016 when Samsung had to deal with the fallout from the Galaxy Note7 recall. The disappointing earnings are attributed to weak sales of memory and flagship phones.

Weak market conditions apparently caused the supply of DRAM and NAND flash memory chips to be higher than the demand, which forced Samsung to lower the prices. This in turn affected the profitability of the memory chips. While Samsung expects demand to grow in the second half of the year, external uncertainties could bring some volatility. 

Seasonal weakness and declining overall market demand for smartphones also resulted in a 42% drop in profit for Samsung's mobile division. Strong sales of the Galaxy A series helped the company increase shipments quarter-over-quarter, but "weak sales momentum" of the Galaxy S10 series dragged the mobile business down.

Nonetheless, Samsung will be focusing on the upcoming launches of the Galaxy Note10 and the Galaxy Fold to strengthen its flagship lineup. It will also enhance the 5G smartphone lineup and introduce more competitive A series devices to increase sales. 

Earnings for the display panel business increased, thanks to higher shipments of OLED panels. Samsung expects to see further growth in this sector from stronger sales and higher production as major customers are preparing to launch new products.

Source: Samsung via The Verge, SamMobile

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