Samsung Electronics had to endure their profits stumbling during the second quarter, with its key chip business stuttering, forcing the company to warn stakeholders of “challenges” that it may face in the future.
The world’s biggest smartphone and memory chip maker stated that its operating profit declined by 56% from the previous year, with the results indicating the industry’s downtrend, which has not been helped out by the ongoing United States and China trade war.
However, the South Korean company faces an even worse future, particularly to its memory chip business, with an ongoing trade dispute between South Korea and Japan.
Samsung had to publicise an operating profit of 6.6 trillion Korean won (€5 billion) for the three months up until June, signifying a fall of 56% from the 14.87 trillion Korean won (€11 billion) that was posted during the same period last year. However, this result was in line with the company’s forecasts.
In a statement published on Samsung’s official website, it said that the weakness and price falls in the memory chip market persisted “despite a limited recovery in demand.”
To add to that, Samsung also stated that “The company is facing challenges from uncertainties not only in business areas but also from changes in the global macroeconomic environment.”
Japan has recently imposed export curbs on particular industrial materials that South Korea requires in order to make semiconductors and display screens, thus resulting in Samsung having to spend more money in order to complete its products.
The trade dispute has also resulted in several concerns arising with regards to the risks that this dispute may present to global technology supplies, which could also have an impact on Samsung’s future earnings.
However, Samsung is hoping that the upcoming launches of the Galaxy Fold as well as the Galaxy Note 10 will push its premium smartphone sales. This comes after the company was forced to delay the launch of its Galaxy Fold till September, after there were reports of broken screens. Apart from this, Samsung plans to release a set of “more competitive A-series models” during the second half of this year.
The company has had to oversee a decline in smartphone sales after the embarrassment it had to endure when it came to the testing of the Galaxy Fold, which has resulted in growing competition from various companies, including the United States-based Apple, as well as China’s Huawei.
Apart from the optimistic future with regards to smartphone sales, the company also aims to improve when it comes to the display business, with improvements in performance when it comes to higher shipments of OLED displays. Samsung believes that phone manufacturers will start utilising thinner panels in order to lessen the design constraints that 5G devices may face.