Samsung Elec profit growth slows despite stellar chip sales

Galaxy A

Samsung has posted its slowest quarterly profit growth in more than a year as the sluggish global smartphone market weighed on earnings.

Samsung's smartphone revenues, by contrast, plunged 20 percent on-year to W24 trillion, and operating profit nosedived 35 percent to W2.7 trillion.

The operating profit for the chip division accounted for 78.1 percent of the entire pie, trailed by the IT and Mobile Communications division at 17.9 percent. Samsung said it will increase the portion of 10-nanometer-class products and the mass production of 5th-generation V-NAND, while addressing demand for high-density server memory and high-bandwidth memory.

It predicted that the market for smartphones and tablet PCs in the second half will remain a challenge despite the rise in seasonal demand. Its phone business reported 2.67 trillion won in operating income during the three-month period, compared with 4.06 trillion won a year earlier.

"The Samsung Galaxy Tab A 10.5" is slated for release on August 24, and it will come in Wi-Fi-only and LTE flavors which will cost €329 and €389, respectively. The tablet is selling well, according to figures from IDC.

The company said it also plans to expand the scope of services powered by artificial-intelligence technology, and seek to improve connectivity with voice-recognition system Bixby and mobile payment tool Samsung Pay.

But Samsung said it "expects sustained strength in the memory market and growing demand for flexible OLED panels to drive earnings higher in the second half".

The device, which was launched at Rs 16,990 in April, has got a price cut of Rs 3,000 and is now selling at Rs 13,990 through Amazon and offline retail outlets.

The chip business has been keeping Samsung's revenue high at a time where the smartphone business isn't making as much as a decade ago. Their easy successes in the smartphone industry are likely a thing of the past, but that doesn't mean they can't still hold a large percentage of the market if they continue to make great phones. That work has fueled rumors of a foldable smartphone from Samsung for years. "There also needs to be an accumulated scenario of user experience, so we've been working on it for years".

Despite some bumps in the road, the company's outlook remains sunny for the second half of 2018.

Weak sales of its flagship smartphone, the Galaxy S9, drove down earnings but robust demand for premium TVs - thanks to soaring interest in the World Cup - and memory chips helped boost operating profit almost six%.

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