Samsung Electronics profit growth slows despite stellar chip sales

  • Samsung Electronics profit growth slows despite stellar chip sales

Samsung Electronics profit growth slows despite stellar chip sales

But sales for Samsung were down even for the traditionally low-key quarter, as its flagship phones struggled to outshine the iPhone X and iPhone 8.

Samsung attributed the record-breaking performance to higher demand for chips for expanding data centers or cloud services and a trend for electronic devices like smartphones with a larger storage capacity.

The company added however that robust demand for memory chips helped boost the operating profit.

In the Display Business, the Company saw weak demand for flexible OLED panels in the second quarter while the shipment and price for LCD panels also fell.

The company said the new Note smartphone, which has often been the most expensive phone model from Samsung, would be sold for "a reasonable price" this time. The unit generated 11.6 trillion won in profits, about 80 percent of its total income.

It remains to be seen whether Samsung's difficulties in the mobile business, which accounts for about 40 percent of its revenue, are the result of its own failings or reflect the industry slowdown more broadly.

Samsung's mobile woes drag on profit growth

Although the company's semiconductor business achieved record high operating profits of 11.6 trillion won, the earnings were lower than expected, with market forecasts averaging 12 trillion won.

In the near-term, Samsung said competition would intensify in the second half as new smartphone models were released, prompting it to introduce a new Galaxy Note earlier than usual.

"The Samsung Galaxy Tab A 10.5" is slated for release on August 24, and it will come in Wi-Fi-only and LTE flavors which will cost €329 and €389, respectively. "In response, in order to secure our profitability, we will focus on expanding sales of our competitive new models in all segment [s], from flagship to mass models, and secure well organized and effective marketing campaigns".

Looking to the second half, the TV market is projected to grow YoY, especially in developed economies. "Its third-quarter operating profit is expected to hit 16.8 trillion won", said Lee Seung-woo at Eugene Investment & Securities. Samsung DeX is the company's version of a desktop operating system that supports things like multiple, desktop style windows that can be resized and there is support for actions like dragging and dropping content between apps.

Samsung said it also chose to hand out dividends of 354 won per shares, with the combined amount of 2.4 trillion won. The second-quarter report was announced before the stock market's opening Tuesday.