Samsung posts weakest profit since 2016 because of weak chip, smartphone markets

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in General Discussion
Samsung Electronics on Tuesday reported Q1 operating profits of $5.4 billion, its lowest quarterly figure since 2016, blaming dropping chip prices and slowing display orders.

The iPhone XS and XS Max both rely on Samsung OLED panels.
The iPhone XS and XS Max both rely on Samsung OLED panels.


Memory chip makers, Samsung included, have been affected by a weakening global smartphone market and lowered demand from data centers, Reuters reported. Beyond just chip manufacture, the company's mobile business suffered a 40 percent drop in profits to just under $2 billion.

Samsung said it expects Q2 figures to reflect further weakness in chip prices, displays, and smartphones, but is forecasting recovery across the board beginning in the second half of 2019. That should be helped by new phone models ranging from the low to high end.

Despite the ongoing Galaxy Fold debacle, there's "no change" in Samsung's movement toward foldable phones, said mobile VP Lee Jong-min.

"Samsung Electronics have been preparing Galaxy Fold for a long period and there's no change to our direction to provide premium experiences for customers desiring innovation," he commented.

The company was forced to postpone the launch of the Galaxy Fold after early reviewers encountered broken displays within just a day or two of use. It's now working on reinforcing the design, though it has yet to announce when a revamped Fold might ship.

Samsung is Apple's primary OLED supplier for the iPhone XS and XS Max, and likely continues to supply memory for multiple Apple products. That could have implications for Apple's March-quarter results, which will be announced later today.

December-quarter iPhone shipments were down 15 percent year-over-year, hurt mostly by weak performance in China. Local phone brands like Huawei and Xiaomi have begun to catch up to the iPhone with their higher-end models, while simultaneously offering lower prices.

Comments

  • Reply 1 of 17
    lkrupplkrupp Posts: 9,452member
    But only Apple’s drop in iPhone sales means anything, right, analysts?
    agilealtitudetmayericthehalfbeeMplsPmagman1979cornchipAppleExposedwatto_cobra
  • Reply 2 of 17
    thttht Posts: 4,029member
    It’s a mature market. The low hanging fruit are all gone. However, 5b in operating profits, who knows what it is in actual net income, is awesome. Hopefully, Samsung is giving everyone bonuses.
    watto_cobra
  • Reply 3 of 17
    blastdoorblastdoor Posts: 2,435member
    Samsung's only advantage over the Chinese smartphone makers is that they are not viewed as tools of the Chinese government (that I know of, anyway). 

    If the Chinese smartphone makers can ever shake that reputation, then Samsung is toast, since the Chinese make just as good of phones, if not better. 

    But.... I doubt that will happen anytime soon. Things in China would need to change a lot before I'd trust any computing device (beyond simple components) built by a Chinese company. 
    StrangeDayscornchipwatto_cobra
  • Reply 4 of 17
    jungmarkjungmark Posts: 6,866member
    You mean “Apple supplier Samsung...”

    How else are you able spin Apple’s impending doom without this qualifier. 
    watto_cobra
  • Reply 5 of 17
    sirozhasirozha Posts: 801member
    lkrupp said:
    But only Apple’s drop in iPhone sales means anything, right, analysts?
    I'm not an analyst, but please remember that for Samsung, the smartphone division is not the core business or main revenue stream. For Apple, the smartphone division is the core business and the main revenue stream. 

    I think we are going to be unpleasantly surprised this afternoon with the Apple numbers. I hope I'm wrong. 
    edited April 2019 MplsPmuthuk_vanalingam
  • Reply 6 of 17
    sirozha said:
    lkrupp said:
    But only Apple’s drop in iPhone sales means anything, right, analysts?
    I'm not an analyst, but please remember that for Samsung, the smartphone division is not the core business or main revenue stream. For Apple, the smartphone division is the core business and the main revenue stream. 

    I think we are going to be unpleasantly surprised this afternoon with the Apple numbers. I hope I'm wrong. 

    Sorry, but it’s a huge chunk for Samsung. Between 40-50% of their business (depending on quarter) is from their mobile division.

    This current quarter their mobile division accounted for 49% of total revenue.

    Edited. It’s 49%, not 47% of the current quarter.
    edited April 2019 watto_cobra
  • Reply 7 of 17
    MplsPMplsP Posts: 3,250member
    lkrupp said:
    But only Apple’s drop in iPhone sales means anything, right, analysts?
    OMG! Samsung is DOOMED! 

    Oops - wrong company. Sorry. Samsung will be fine. :tongue: 

    cornchipAppleExposedwatto_cobra
  • Reply 8 of 17
    rogifan_newrogifan_new Posts: 4,297member
    blastdoor said:
    Samsung's only advantage over the Chinese smartphone makers is that they are not viewed as tools of the Chinese government (that I know of, anyway). 

    If the Chinese smartphone makers can ever shake that reputation, then Samsung is toast, since the Chinese make just as good of phones, if not better. 

    But.... I doubt that will happen anytime soon. Things in China would need to change a lot before I'd trust any computing device (beyond simple components) built by a Chinese company. 
    What is Apple’s advantage in China when consumers do most stuff in apps like WeChat?
  • Reply 9 of 17
    sirozhasirozha Posts: 801member
    sirozha said:
    lkrupp said:
    But only Apple’s drop in iPhone sales means anything, right, analysts?
    I'm not an analyst, but please remember that for Samsung, the smartphone division is not the core business or main revenue stream. For Apple, the smartphone division is the core business and the main revenue stream. 

    I think we are going to be unpleasantly surprised this afternoon with the Apple numbers. I hope I'm wrong. 

    Sorry, but it’s a huge chunk for Samsung. Between 40-50% of their business (depending on quarter) is from their mobile division.

    This current quarter their mobile division accounted for 49% of total revenue.

    Edited. It’s 49%, not 47% of the current quarter.
    How about for Apple?
  • Reply 10 of 17
    kruegdudekruegdude Posts: 340member
    sirozha said:
    lkrupp said:
    But only Apple’s drop in iPhone sales means anything, right, analysts?
    I'm not an analyst, but please remember that for Samsung, the smartphone division is not the core business or main revenue stream. For Apple, the smartphone division is the core business and the main revenue stream. 

    I think we are going to be unpleasantly surprised this afternoon with the Apple numbers. I hope I'm wrong. 
    My thinking around Apple is they are more homogeneous in how they’re run as a company so the have no real core business, just some aspects of their business that produces more income than others. At least that’s my impression. 
    tmaycornchipAppleExposed
  • Reply 11 of 17
    Does anyone else ever think that if the DOD or the US Military decided to pull out of South Korea, Samsung would be screwed? In a weird way Apple has to compete against (and work with), a company that’s subsidized by the US tax payers. Maybe I’m taking things way too far. 
    cornchipwatto_cobra
  • Reply 12 of 17
    elijahgelijahg Posts: 2,311member
    lkrupp said:
    But only Apple’s drop in iPhone sales means anything, right, analysts?
    Samsung's mobile division only dropped 6% revenue, Apple's phone division dropped 17.5% yoy revenue. Samsung's semiconductor division dropped about 30% though.
  • Reply 13 of 17
    elijahgelijahg Posts: 2,311member

    sirozha said:
    sirozha said:
    lkrupp said:
    But only Apple’s drop in iPhone sales means anything, right, analysts?
    I'm not an analyst, but please remember that for Samsung, the smartphone division is not the core business or main revenue stream. For Apple, the smartphone division is the core business and the main revenue stream. 

    I think we are going to be unpleasantly surprised this afternoon with the Apple numbers. I hope I'm wrong. 

    Sorry, but it’s a huge chunk for Samsung. Between 40-50% of their business (depending on quarter) is from their mobile division.

    This current quarter their mobile division accounted for 49% of total revenue.

    Edited. It’s 49%, not 47% of the current quarter.
    How about for Apple?
    About 53% by revenue.
    edited April 2019
  • Reply 14 of 17
    AppleExposedAppleExposed Posts: 1,805unconfirmed, member
    sirozha said:
    lkrupp said:
    But only Apple’s drop in iPhone sales means anything, right, analysts?
    I'm not an analyst, but please remember that for Samsung, the smartphone division is not the core business or main revenue stream. For Apple, the smartphone division is the core business and the main revenue stream. 

    I think we are going to be unpleasantly surprised this afternoon with the Apple numbers. I hope I'm wrong. 

    iPhone is no more "core" than the knockoffs from Samsung.

    Do you really think iPhone was Apples core pre-2007? Funny how people re-interpret Apples "core" every decade. I predict soon Apple will be a "services company" and their "core" will be "services".
    watto_cobra
  • Reply 15 of 17
    avon b7avon b7 Posts: 5,901member
    sirozha said:
    lkrupp said:
    But only Apple’s drop in iPhone sales means anything, right, analysts?
    I'm not an analyst, but please remember that for Samsung, the smartphone division is not the core business or main revenue stream. For Apple, the smartphone division is the core business and the main revenue stream. 

    I think we are going to be unpleasantly surprised this afternoon with the Apple numbers. I hope I'm wrong. 

    iPhone is no more "core" than the knockoffs from Samsung.

    Do you really think iPhone was Apples core pre-2007? Funny how people re-interpret Apples "core" every decade. I predict soon Apple will be a "services company" and their "core" will be "services".
    iPhone is very much 'core'. Logically pre-2007 is wasn't and post iPhone, we may see a new core or even a simple spread of revenue earners with no core business.

    It isn't interpreting or even re-interpreting. It is looking at the numbers and stating the obvious.
  • Reply 16 of 17
    sirozhasirozha Posts: 801member
    sirozha said:
    lkrupp said:
    But only Apple’s drop in iPhone sales means anything, right, analysts?
    I'm not an analyst, but please remember that for Samsung, the smartphone division is not the core business or main revenue stream. For Apple, the smartphone division is the core business and the main revenue stream. 

    I think we are going to be unpleasantly surprised this afternoon with the Apple numbers. I hope I'm wrong. 

    iPhone is no more "core" than the knockoffs from Samsung.

    Do you really think iPhone was Apples core pre-2007? Funny how people re-interpret Apples "core" every decade. I predict soon Apple will be a "services company" and their "core" will be "services".
    No, I don't think iPhone was "core" pre-2007. Maybe I don't think so because iPhone didn't exist before 2007? What do you think ? 
    watto_cobra
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