Samsung Profit Halves Amid Flagship S10, Memory Chip Slowdown

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Galaxy S10’s sales momentum is ‘weak’, but slow sales of memory chips is also not helping matters

Samsung Electronics has reported that its operating profit in its second quarter has folded pretty much like its troubled Galaxy Fold device – in half.

The second quarter usually tends to be a difficult period for smartphone makers, with some consumers delaying purchasing decisions until the release of newer handsets (usually in Q3.)

Samsung admitted a slowdown in sales of its Galaxy S10 handsets in Q2, but there is also a slowdown of memory chips the South Korean giant is also contending with.

The Galaxy S10. Image credit: Samsung

Profit decline

It should be remembered that Samsung is the world’s largest smartphone and memory chip maker, but it has revealed operating profit of 6.6 trillion Korean won (£4.6bn) for the three months to June, which was down 56 percent from the 14.87 trillion Korean won in the same year-ago period.

Revenue at the firm revenue also fell 4 percent to 56.13 trillion Korean won.

Samsung puts its troubles largely down to weak market conditions for its all-important semiconductor business.

“Memory chip market remains weak, demand seen recovering amid external uncertainties,” it said.

This refers to the ongoing problems caused by the US-China trade war. But there is also problems with South Korean trade with Japan, after a trade row between Seoul and Tokyo.

Japan has recently imposed export curbs on certain industrial materials that is needed to make display screens and semiconductors.

“The weakness and price declines in the memory chip market persisted as effects of inventory adjustments by major data center customers in the previous quarters continued, despite a limited recovery in demand,” said the firm.

Flagship slowdown

“The Mobile Business posted stronger shipments on new mass market models but was overall weighed down by slower sales of flagship models and increased marketing expenses,” Samsung added. “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.”

Samsung said intends to relaunch its Galaxy Fold smartphone/tablet hybrid in September, after problems with its innovative folding screen.

Apple this week also revealed an ongoing slowdown in sales of its iPhone handsets.

That resulted in a smaller profit, but sales increased thanks to a strong showing from the Apple Watch and its service division.

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Author: Tom Jowitt
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