Well, investors can’t say they weren’t warned. Samsung’s profit guidance from the start of the month, warning investors to beware of a 56% drop in profits year-on-year, turned out to be right on the money.
As close to predicted, the world’s biggest phone manufacturer posted an operating profit of 6.6 trillion Korean won (~£4.6 billion), which sounds fabulous until you realise that this time last year the company was celebrating profits of 14.87 trillion Korean won (~£10.3 billion).
Despite not mentioning the year-on-year change in the press release, Samsung does tacitly attempt to justify the weaker results by explaining that “the weakness and price declines in the memory chip market persisted as effects of inventory adjustments by major datacenter customers in the previous quarters continued, despite a limited recovery in demand.”
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On top of this, the firm is also absorbing a bit of flak from Apple’s sluggish iPhone sales, as Samsung provides a number of parts. The slowing of the high-end phone market also impacts Samsung’s own products, of course.
How does Samsung intend to tackle this slump? Well, in part, it’s going to bet on mid-range phones like the rather excellent A50 and A70, which ape features of the flagship S range in a far cheaper package. In the third quarter, Samsung says it will “enhance the 5G smartphone lineup to take the lead in the new market and introduce more competitive A series models in the second half to extend the ongoing positive momentum in mass market smartphone sales.”
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But as the first note about 5G suggests, it’s not all about ceding the top-end market to others. Samsung says it plans to “maximize end-year sales through close cooperation with retail partners and cementing the 8K leadership by positioning QLED 8K TVs as mainstream TVs.”
Making 8K mainstream in a world where there’s still not that much accessible 4K content will be a stretch, but Samsung seems to think the appetite is there.
Will things pick up for Samsung in Q3? Let us know what you think on Twitter: @TrustedReviews.