Earnings

Weak Chip Sales, Mobile Slowdown Hits Samsung's Q4

Samsung

For Samsung, weak demand in the rearview mirror, weak demand on the horizon, but will phones rebound?

Data from China show double-digit percentage drops in shipments in the fourth quarter, and of course Apple has had its own illumination of a slowdown in phones.

The latest shoe to drop belongs to Samsung, which on late Wednesday (Jan. 30) reported results that came roughly in line with expectations but showed steep declines across several metrics and business as demand for both chips and phones slipped. All in all, as demand for phones suffered, so too did memory chips and mobile displays that find their way into those phones.

In reference to the larger picture the company said that “unfavorable business and macroeconomic factors” hit performance. In terms of the numbers, the tech giant said that revenues were down 10 percent year over year to 59.3 trillion won (a bit more than $53.4 billion) and that comes in line with a January warning over results.  Operating profits were down at a more heightened pace, off 29 percent to 10.8 trillion won.

Breaking down the numbers a bit, sales that were tied to mobile operations were off 11 percent, landing at 22.2 trillion won. The firm pointed to a “sluggish” smartphone market, and that comes right into a seasonal slowdown.   The slowdown is also one that may last, as Apple reported separately in its own results said that March quarter results would be lower than some had expected, amid the slowdown in China.

Samsung, facing the slowdown now underway, nonetheless said that newer models such as the Galaxy S10 would be able to boost sales and performance moving forward.

Sales in Samsung’s memory chip business were off 14 percent, and semis as a unit saw sales down 11 percent year on year — and the display panel sales were off 18 percent tied to competition amid mobile display firms.

Smartphone demand should be at the same level in 2019 as had been seen in 2018. And in terms of strategy moving forward, said the company will focus on “increased connectivity” and will expand Bixby to various devices and services, and will boost its digital appliances efforts.

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