Waning demand in the memory market is putting a dent in Samsung’s bottom line.
What you need to know
- Samsung is forecasting a profit of $5.5 billion in Q2 2019, a massive 56% decline from the same time a year ago.
- The decline is attributed to slow sales in the memory sector, which is Samsung’ main revenue driver.
- Phone sales were also lackluster, with Samsung looking to the Note 10 to boosst revenue in Q3.
Samsung just had its worst quarter in a long time, with the South Korean manufacturer forecasting a profit of $5.5 billion (6.5 trillion won) in Q2 2019 on overall revenue of $47 billion (56 trillion won). That’s a massive 56% decline in profit from the $12.5 billion it netted in Q2 2018.
The figures are in line with Q1 2019, where the manufacturer netted $5.3 billion in profit. The decline in profit is directly attributed to the slowdown of the memory market, where Samsung is the leader. Samsung’s record-breaking quarters in recent years have all been a result of strong showing by the company’s chip unit, and with that segment slowing down, Samsung’s overall bottom line is taking a hit.
The Huawei ban wouldn’t have made things any easier for Samsung, as it sells a lot of DRAM and storage modules to the Chinese manufacturer. With the memory market slated to bounce back in the second half of 2020, it looks like a tough few quarters ahead for Samsung.
Samsung’s phone business isn’t doing so great either, but as is the case in previous years the manufacturer will be looking to the Galaxy Note series to boost revenue in Q3. As noted by CNBC, the Q2 2019 figures also include a one-time payment of $685 million (800 billion won) by Apple to Samsung Display — which outfits OLED panels on iPhones — for missing a sales target.