Samsung's net profit in the second quarter more than halved, to KRW 5.18 trillion from KRW 11.04 trillion a year ago, due to a fall in results at its semiconductor business and lower profitability in smartphones. The company's revenues fell 56 percent to KRW 56.13 trillion, led by the decline in memory products.
Revenues at the mobile division rose by 8 percent to KRW 25.86 trillion, while operating profit fell to KRW 1.56 trillion from KRW 2.67 trillion a year ago. Samsung said shipments increased as the new A series drove sales of mid-range devices. However, sales of premium phones slowed compared to Q1 as the launch of the S10 faded and demand was stagnant.
The drop in profit was due to increased costs associated with growing competition in the mid- to low-end segment and inventory adjustments of older models, Samsung said. Earnings for the Networks Business improved thanks to the expansion of commercial 5G service in South Korea and LTE networks in overseas markets.
Samsung said it expects the smartphone market to remain weak in H2, as demand is further impacted by the poor economic outlook and trade tensions. It will focus on further strengthening its mid-range sales, as well as the launch of the new Galaxy Note, Galaxy Fold and more 5G devices. In addition, a new Galaxy Tab and Watch will be unveiled in the coming week. It will also strive to improve profitability with a greater focus on operational efficiency.
Chip sales fall 27%
In the semiconductor business, sales were down 27 percent year-on-year to KRW 16.09 trillion, and operating profit tumbled to KRW 3.40 trillion from KRW 11.61 trillion a year ago. Samsung blamed the drop on price declines in the memory market and inventory adjustments by data centre customers. Demand for NAND and DRAM still increased, thanks to mobile and storage customers, and Samsung sees further improvement in the second half, offset by the external uncertainties in the market.
Displays return to profit
Samsung also reported a return to profit at its display panel business, of KRW 0.75 trillion, thanks to a one-time gain and a gradual recovery in customer demand. Mobile display earnings increased, led by higher shipments of OLED panels featuring new technologies such as fingerprint-on-display and hole display. Large display sales also saw a slight improvement from the previous quarter on demand for premium panels and reduced costs, the company said.
Samsung sees mobile display demand improving further in H2 thanks to the launch of new models ahead of the holiday season. The company said OLED demand is also growing, on the need for slimmer displays to fit 5G components.
