Samsung Electronics profit growth slows as Galaxy S9 misses sales targets

Florence Fletcher
August 2, 2018

Analysts expect Apple to report an increase in revenue as well as profit for its third quarter Tuesday, helped in part by the resilient sales of the iPhone lineup. The company managed to sell just 9 million units of Galaxy S9 in the second quarter.

As the mobile business struggles, the chip business stayed as Samsung's top earner during the second quarter as sales to the cloud-computing and cryptocurrency industries buoyed RAM chip prices even as NAND flash memory prices dropped.

In addition to poor sales of the Galaxy S9, the company's profit was also hit by weak demand for flexible OLED panels and reduction in price and quantity of LCD panels.

There are reports that Samsung Galaxy S10 could be the first phone from Samsung to come with triple rear cameras but the latest report hints that Galaxy A 2019 series phone could be the first phone from Samsung to sport three cameras on back.

Samsung's smartphone shipments and sales declined quarter-on-quarter amid the sluggish premium smartphone market, leading to the fall in sales and operating profit. Disappointing sales of Samsung's flagship Galaxy S9 smartphones were largely to blame. The competition is now having effect on the Samsung's earnings of Q2 2018.

Samsung officially lifted the lid off of its Galaxy Tab S4 tablet, and well before its Galaxy Note 9 Unpacked event that is set to take place next week.

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"The outlook for the memory chip business remains strong across all applications thanks to demand for server and PC memory as well as new mobile product launches", it said in a statement.

Xiaomi and Huawei have made massive inroads in the Chinese and Indian markets, which are the two largest smartphone market pools on the planet.

In mobile, demand for high-density storage for new smartphones and high-end models is likely to remain robust. Samsung Knox, the company's enterprise solution, will allow IT managers to tailor interface with their business needs. But it expected challenges in the mobile business going forward.

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.

The company spent 8 trillion won (7.2 billion US dollars) in capital expenditure in the second quarter, including 6.1 trillion won (5.5 billion USA dollars) for the chip business and 1.1 trillion won (984 million USA dollars) for the display panel division.

Shares of Samsung Electronics traded at 46,150 won as of 10:03 a.m., down 0.75 percent from the previous session.

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