No Huawei bounce as Samsung's Q2 profit down 56%

Samsung’s financial numbers for the second quarter of the year were only a third of what they were in the third quarter of 2018.

Figures came in at 56.13 trillion Korean won ($47.4 billion) in consolidated sales, and 6.6 trillion won ($5.58 billion) in operating profit, which represents a 56% drop.

Samsung attributes its slow performance to weakening market conditions and “growing uncertainties over the global economy and trade.”

The company’s mobile business reported 25.86 trillion Korean won in consolidated revenue and 1.56 trillion won for its operating profit- down 42% from a year ago.

Memory components that are used in mobile handsets and enterprise servers, make up Samsung’s main profit-making business.

The global semiconductor industry is currently undergoing a period of inventory adjustment, which is what’s keeping demand low.

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

Despite the weak market conditions, Samsung said its memory unit actually saw increased demand.

Figures show that their semiconductor business had a consolidated revenue of 16.09 trillion won, and an operating profit of 3.4 trillion won for the quarter- down 71% from a year ago.

Demand is expected to grow although the Company sees volatility in the overall industry due to increased external uncertainties

Another drawback is the ongoing dispute between Japan and South Korea, which has led to Tokyo restricting exports of crucial high-tech materials that are used to make chips and smartphone displays.

While high inventory levels will compensate, for now, it will ultimately lead to an increase in cost in smartphones and other electronics.

We are facing difficulties due to the burden of this new export approval process, and the uncertainties that this new process would bring

The visibility is low. However, our executives and the relevant business divisions are dedicating their utmost efforts and deriving solutions to minimize any potential negative impact these new measures may have on our manufacturing process.

Despite a disappointing quarter, Samsung expects the Galaxy Note 10 -set for release in August- as well as its highly anticipated Galaxy Fold, to “achieve higher volumes” than the Note 9’s.

Source: CNBC