Samsung's Quarterly Profits Drop; Maintains Positive Outlook

Amidst the issue of oversupply, semiconductor prices had declined resulting into a 56% drop in Samsung Electronics Co Ltd's quarterly profit. The mobile Titan still has its hopes up that after the chip market bottoms out, it will eventually be able to recover.

This ultimately gives investors hope as they recognize, and are all too well familiar with the memory chip market's penchant to rise and fall. They take into account that the industry might be shifting out of a downturn relating to the slowing sales of mobile gadgets.

In an issued statement, the South Korean said:

“Server demand is expected to increase gradually as customers adjust their inventory levels and resume purchasing, while PC demand is also likely to expand”

On the other hand, Samsung also recognized that the uncertainties in the memory and mobile trade had been persistent and that they had faced them head-on during the second half. While they did not elaborate on it, they attributed the drag in earnings on the U.S.-China trade war.

Also in the cards are the effects on the Japanese curbs on the export of key materials to the third-quarter results. These curbs are the latest in the diplomatic banter between Seoul and Tokyo regarding wartime forced labor.

Possible disruptions in chip manufacturing due to the Japanese export controls were warned by South Korea's SK Hynix last week. They declared that they would cut investment and production to limit the supply.

While the chip business remains to be Samsung piece de resistance, it reported a steep fall of 71% bringing it down from 11.6 Trillion to only 3.4 Trillion won operating profit in the same earning period a year prior.

The mobile industry had only managed to book 1.6 Trillion won in quarterly profit, a dive of 42% from last year's record. Samsung had stated that this was due to slower sales of flagship models and higher marketing expenses.

Samsung does plan on launching two high-end mobile products in the second half to recover lost profit alongside its first foldable device, but it is not nonchalant to the fact that the weakness in the global smartphone market will limit greater earnings.

It has been reported that Samsung shares were down 0.9% as of 0100 GMT, as opposed to a 0.6% fall on the broader market.

Business competitor, Apple Inc. also reported another low for iPhone sales. However overall revenue had gone up, which Apple owes to contributions from content services such as music and apps. This is an advantage that Samsung simply does not have.

Meanwhile, Samsung’s Galaxy Fold will be out in selected markets in September. Highly plausible, analysts see the possibility of headlines detailing glitches with sample Folds that will weaken consumer interest comes the launch.

 

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