Samsung revenue dips 5% due to weak smartphone business

Samsung indicated on Friday that overall sales likely dropped 4.9 percent in the second quarter from a year earlier to 58 trillion won. The Korean company will release detailed earnings in late July.
Samsung IoT solutionsSamsung does not reveal its revenue from telecom network business which supplies to 4G equipments to telecom operators such as Reliance Jio in India, Verizon in the US, among others.

Samsung Electronics said its earnings grew at the slowest pace in more than a year in the second quarter due to poor performance in smartphone business, Reuters reported.

The world’s biggest maker of memory chips, smartphones and TVs said its operating profit for April-June would grow 5.2 percent to 14.8 trillion Korean won or $13.2 billion.

Samsung said the chip business would post its seventh consecutive record quarterly profit.

Samsung is facing tough market conditions in the global smartphone space. Galaxy 9 Plus premium handset had been overtaken by Apple Inc’s iPhone 8 as the world’s top-selling smartphone due to weak sales in Europe, according to Counterpoint Research.

Samsung is losing market share in China and India, the world’s top smartphone markets, due to competition from cheaper Chinese brands like Xiaomi and Huawei. Xiaomi is already the smartphone market leader in India beating Samsung.

Strong global sales of DRAM and NAND chips, which account for about a third of its revenue of the company, is driving Samsung’s profits.

The outlook for chips remains upbeat, with production of Apple’s next iPhone likely to support NAND flash memory prices after they fell by up to 15 percent in the second quarter, according to chip price tracker DRAMeXchange.

The average selling price of DRAM chips, which help devices perform multiple tasks, is forecast to increase 14.8 percent this year, research firm Gartner says.

Investors are growing increasingly concerned about the prospect of a trade war between China and the United States, and how this could impact major exporters like South Korea’s tech companies.

There are also fears that a Chinese price-fixing probe into chipmakers including Samsung could limit the upside for DRAM prices, as China is the largest importer of memory products.

The high cost of chips has hurt many electronics makers, with Chinese manufacturers among the hardest hit as they operate at lower margins than rivals.