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Samsung Electronics Is Ahead Of The Second Quarter Estimates Despite The 56% Drop In Operating Profits

As most analysts expected Samsung Electronics to register a 60% drop in operating profit for the second quarter ending in June. The US supply chain ban on Huawei was expected to result in a reduction in the number of chips sent by Samsung during the three-month period. The chip business represents two-thirds of Samsung Electronics’ sales, so the fact that the Galaxy S10 smartphone line was sold more than the previous year’s Galaxy S9 by 12% should not help year after year to increase the numbers.

samsung

With the time difference, it’s now Friday morning in South Korea and Samsung Electronic’s second-quarter earnings report was officially published. And the results were slightly better than expected according to Bloomberg. For the period, the company reported a 56% drop in operating profits to 6.5 trillion won (equivalent to 5.6 billion dollars). The results were helped by a single profit in the display division since Apple was forced to compensate Samsung for not having purchased the number of OLED panels that it had contractually agreed. Sales, with 56 trillion won (equivalent to $47.9 billion), also exceeded the estimates.

Another Bad News For The Samsung Galaxy Fold

galaxy fold

Shipments of OLED panels from Samsung to Apple for iPhone XS and iPhone XS Max were lower than expected due to weak phone sales. However, it is noted that Samsung was able to generate new business for its AMOLED displays from Chinese phone manufacturers. But there may be some problems in the near future for Sammy’s displays and memory chip business. After a South Korean court ruled last October that Japan needs to compensate South Koreans who were forced to work for Nippon Steel during World War II, Japan ordered new export restrictions on some materials in South Korea These materials are used to produce screens and chips for smartphones and Japanese companies that export them to Korea must now obtain a permit before they can be sent. Getting this permit can take up to 90 days whenever necessary. Given that Japan accounts for between 70% and 90% of the global production of these materials, Samsung may have serious problems producing sufficient displays and chips in the future.

Samsung has not only done well with the Galaxy S10 line so far, but it has also achieved a home run with its new mid-range Galaxy A series. In the first 70 days after the launch of the first models, Samsung had sold over 5 million units and generated revenues of over 1 billion dollars. Three of the models are arriving the US and the Samsung Galaxy A50 is now available in Verizon and Sprint.

The Samsung Galaxy Fold should have been launched during the quarter, April 26th. But the launch stopped on April 22, as the company faced a series of problems discovered by influential people. Some have removed a protective film from the internal screen that should not be touched and damaged. Others had debris entering the Galaxy Fold through an opening in the hinge, which led to a ledge on the screen. Other units simply stopped working. Reportedly, Samsung has completed the redesign of the Galaxy Fold, but a new release date has not yet been announced. And while Galaxy Fold does not need other bad news, it turns out that the material used to produce the protective film taken off by the influent is one of the materials that Japan is limiting exports to South Korea.

(Via: Bloomberg)

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