Samsung Electronics announces a 52% drop in net profit for the third quarter of 2019. Despite the success of the Galaxy Note 10 and Galaxy Note 10+, the South Korean manufacturer announces for the third consecutive quarter results in slump. The company suffers in particular from the fall of the prices of memory chips. To turn the tide, Samsung is banking on the advent of compatible 5G smartphones and foldable phones.
In the third quarter of the year, Samsung achieved revenues of 62 trillion won (about $ 53 billion, down 5%) and operating profit of 7.78 billion won. (about $ 6.71 billion), down 56% from last year. As a reminder, Samsung had already announced a 53% drop in profits in the 2nd quarter of 2019. Same story in the first quarter of the year with a decline of around 50%.
Despite Galaxy Note 10, Samsung announces disastrous results
The mobile division of the group, on the other hand, generated a turnover of 29.25 billion won (about 25 billion dollars), up 17% from 2018, and a profit of 2.92 billion won (about $ 2.5 billion), up 32%.
Samsung attributes these good results to the success of the Galaxy Note 10 and Galaxy Note 10+ and the latest models of the Galaxy A range. In recent months, the brand has indeed strengthened its mid-range offering with devices such as the Galaxy A80. To resist the Chinese competition, embodied in particular by Xiaomi, Samsung has added innovative features, such as a rotating photo sensor, to its more affordable smartphones.
In his statement, the builder states that Note 10 sells much better than Note 9 in 2018. The South Korean group also puts forward an increase in sales of OLED screens for smartphones. As a reminder, the manufacturer provides the slabs of the latest Apple iPhone.
Quarterly results are mostly led by lowering the price of memory chips. " Revenues in the memory sector have dropped significantly compared to last year, knowing that memory chip prices have continued their downward trend " Samsung emphasizes. By 2018, Samsung had made significant profits by marketing its DRAM and NAND memory chips. As forecast by analysts, the peak in prices recorded in 2018 was followed by a sharp fall expected to continue in the coming months.
Samsung bets on 5G and Galaxy Fold 2
To recover in 2020, Samsung will focus on the arrival of 5G and the appeal of folding smartphones. "For 2020, Samsung expects increased sales of 5G products and foldable devices" ensures the firm. This year, the group has already marketed several 5G smartphones, including Galaxy S10 + 5G, Galaxy Note 10+ 5G or Galaxy A90 5G. Samsung is committed to launch even more compatible variants next year.
Samsung is also counting on the success of its future foldable smartphones to generate significant profits. As early as March 2020, the brand would present the Galaxy Fold 2, a foldable smartphone vertical like a flip phone. It is expected that this variant is more affordable than the first Galaxy Fold, sold at more than 2000 €.