Earnings

Samsung’s Strong Q3 Smartphone Sales Weighed Down By Weak Memory Chip Business

Samsung earning drop on memory chip sales

Samsung’s third quarter results showed that profit fell sharply from a year earlier, but improved from the previous quarter.

The company posted KRW 62 trillion ($53.3 billion) in consolidated third-quarter revenue and KRW 7.78 trillion in quarterly operating profit, explaining that “stronger smartphone sales and improved utilization in mobile OLED screens were weighed down by continued weakness in the memory chip market.”

Samsung had posted KRW 65.46 trillion ($56.2 billion) in consolidated revenue and KRW 17.57 trillion in operating profit in Q3 2018.

“Earnings from the Memory Business slumped significantly year-on-year as memory chip prices continued its downward trend amid the industry-wide weakness since the end of 2018. The logic chip business saw demand rise for image sensors and display driver ICs (DDIs), but also suffered from price declines in mobile application processors (APs),” it stated. “The Display Panel Business saw profit from mobile displays increase YoY with solid sales of OLED screens, improved capacity utilization and reduced costs. However, losses continued in the large panel business due to ongoing capacity expansions in the broader industry.”

Samsung’s Mobile Business enjoyed strong sales of the Galaxy Note 10, while also expanding its 5G product offerings and launching the Galaxy Fold. And its Network Business reported higher earnings year-over-year on growing commercialization of 5G service in Korea.

Samsung added that in the fourth quarter, “it expects demand for components to turn sluggish in general amid weak seasonal effects, while marketing expenses are likely to increase to address year-end smartphone sales.”

The company does have plans to use 5G technology to try to boost its bottom line. Back in July it was revealed that the company would increase its market share in the technology to 20 percent by 2020. It also recently unveiled a concept for a new foldable smartphone that is similar to an old flip phone, instead of a horizontal fold like its recently released Galaxy Fold device. In fact, Samsung expects growing sales in 5G products and foldable devices next year, as well as increases for its logic chip business. However, Mobile Business is expected to decrease quarter-over-quarter as marketing costs rise and shipments to decline.

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