Samsung Signals Smartphone Profit Plunge
Today, Samsung Electronics cautioned a reduced mobile business profit. This was after its competitor Apple gave a positive iPhone sales prospect.
In addition, it is dampening the confidences of new models that will support the world’s principal smartphone vendor to get back on a progressive track finally.
Meanwhile, investors have restrained their optimism on a recovery in the mobile business. The operation once also comprised of over half of Samsung’s profit, as its chip procedure remains in stagnation.
The inactivity is due to over-supply and weak global demand.
On the other side, strong sales of the Galaxy Note 10 smartphone facilitated the South Korean firm to report its most exceptional mobile business profit.
The earnings were in six quarters of the three months that have ended in September. This is as they try to recover from a battery explosion disgrace in late 2016 that pummeled sales.
Moreover, the mobile business sent a 32% upsurge in operating profit to 2.9 trillion won ($2.5 billion) in the third quarter. It was the highest since the first quarter of 2018.
On the flip side, Samsung advised that the fourth-quarter mobile incomes would drop.
The decline is due to the marketing cost increase, and sales of leading models softened from their post-launch peaks.
Elsewhere, the downbeat prediction came hours after Apple Inc stated that the holiday-quarter sales would beat Wall Street expectations. The statement is citing demand for amenities, wearables, and its latest iPhones.
An analyst at HI Investment & Securities, Song Myung-sup, said, “The new smartphone effect will possibly fizzle out in the fourth quarter, as people don’t find Samsung’s new Note model, which came out several months ago, very attractive anymore.”
He also added, “That will result in a drop on shipments and eventually less profit.”
5G Technology to Boost Markets
Meanwhile, Samsung’s vice president of the mobile communications business, Lee Jong-min, told an earnings phone call that mobiles were on a descending trend.
In addition, “Although the mobile market, in general, will soon enter a period of robust year-end seasonality, demand is anticipated to keep trending down year-on-year due to persistent uncertainties in the global macro environment,” he said.
Next year, Samsung will be making a bet on development in the markets for 5G and foldable phones.
Just this week, it has exposed a design for a phone that can fold into a square. This also serves as a hint at its next invention is in line with the foldable segment.
In the third quarter, Samsung’s smartphone shipments grew by 8% to 78.2 million phones.
According to Strategy Analytics, it has been outgrowing Apple, whose iPhone sales fell by 3%.
Moreover, analysts say Samsung’s smartphone sales were on boost. It is through U.S. sanctions on Huawei Technologies. This has also upset the Chinese company’s mobile business in the global market.
In contrast to its attentiveness over the mobile sector, Samsung indicated that chip sales should give a lift next year.
Sales must be showing positive signs of demand. The appeal would come from data-center customers and 5G smartphone producers.
Last September, the world’s largest memory chipmaker said operating profit inched down by 56% to 7.8 trillion won ($6.7 billion). This is slightly above the 7.7 trillion won approximated by the company earlier.
Revenue also weakened by 5.3% to 62 trillion won, in line with its earlier estimates.
