Can the Latest Galaxy Releases Help Struggling Samsung

Samsung Electronics reported that profits for the most recent quarter (ending in June) have dropped more than 50 percent over the same quarter from the year prior on the heels of falling memory chip prices.  

Effectively, operating profit for the most recent quarter dropped 55. 61 percent, to 6.6 trillion Korean won.  That is equivalent of about $5.6 billion from the same period one year ago.  According to Samsung, who remains the world’s largest smartphone maker, consolidated revenue for the quarter came in at 56.13 trillion won. 

In a news release, Samsung noted, “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.”

Fortunately, the numbers were actually better than the company’s earlier guidance reported, which they released earlier this month.  But that still could not prevent Samsung shares from tumbling 2.58 percent. 

But when you look at the rest of the numbers, it is easy to see why the Korean tech giant has been struggling.  For one, Samsung has reported that its semiconductor business posted a consolidated revenue of 16.09 trillion won, on an operating profit of 3.4 trillion won, for this quarter.  That might sound like a lot but these numbers are actually down more than 70 percent from the same period last year.  Still, the company did say its memory unit saw increased demand even among weakening market conditions. 

Perhaps more importantly, this is is Samsung’s second consecutive quarter to see a decline of more than fifty percent, year-over-year.  Actually, in the three months ending in March, Samsung watched profits all approximately 60 percent for the year, so far, to 6.2 trillion Korean won; roughly $5.3 billion USD.

You may not realize that chipmakers in South Korea, as a whole, face an ongoing dispute with Japan that has led to Tokyo restricting exports of extremely important materials used by not only Samsung, but also SK Hynix.  They need these crucial high-tech supplies to make their chips as well as their smartphone displays.  

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