Growing competition in the mature TV and smartphone markets is expected to pose a challenge in the second half of 2019 Samsung statement
seoul — Samsung Electronics, the world’s biggest smartphone and memory chip maker, reported a slump in first-quarter net profits Tuesday, in the face of a weakening chip market and rising competition.
The result is the latest bad news for the tech titan, which last week was forced to delay the release of its much-hyped $2,000 foldable smartphone owing to problems with the screen.
Net profits in the January-March period were 5.04 trillion won ($4.3 billion) — the lowest since the third quarter of 2016 and down 56.9 per cent year-on-year. Operating profit also plunged 60.2 per cent to 6.2 trillion won, while sales fell 13.5 per cent to 52.4 trillion won.
The firm is the flagship subsidiary of the giant Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in the world’s 11th largest economy, and it is crucial to South Korea’s economic health.
It has enjoyed record profits in recent years despite a series of setbacks, including a humiliating product recall and the jailing of its de facto chief.
But now the picture is changing, with chip prices falling as global supply increases while demand weakens. It also has to contend with increasingly tough competition in the smartphone market from Chinese rivals like Huawei — which in 2017 surpassed Apple to take second place — offering quality devices at lower prices. Samsung had warned investors of a 60 per cent-plus fall in first-quarter
Growing competition in the mature TV and smartphone markets is expected to pose a challenge in the second half Samsung statement
operating profits, citing weak display and chip sales.
“Mobile displays suffered slower demand and intensifying competition with LTPS LCDs,” the company said. “Large displays also took a hit from a continued decline in LCD panel prices amid weak seasonality.”
Samsung shares ended down 0.65 per cent in Seoul. “Growing competition in the mature TV and smartphone markets is expected to pose a challenge in the second half (of this year),” Samsung said in a statement.
Samsung launched its top-end S10 5G smartphone earlier this month, after South Korea won the global race to commercially launch the world’s first nationwide 5G network. But it last week made a high-profile decision to push back the release of its new Galaxy Fold phones after reviewers provided with early devices reported screen problems within days of use. While Samsung’s device was not the first folding handset, the smartphone giant was expected to help spark demand and potentially revive a sector that has been struggling for new innovations.
The South Korean firm had spent nearly eight years developing the Galaxy Fold as part of its strategy to propel growth with groundbreaking gadgets. The move comes after Samsung was forced to announce a worldwide recall of its Galaxy Note 7 devices in 2016 over exploding batteries in 2016, dealing a blow to its reputation and costing it billions of dollars.
The quarterly figures come after South Korea’s SK Hynix, the world’s second-largest memory chip maker, said operating profits plunged more than two-thirds in the first quarter. —