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Samsung Electronics profit growth slows despite stellar chip sales

SEOUL (Reuters) – Samsung Electronics Co Ltd (005930.KS) posted its slowest quarterly profit growth in additional than a 12 months on Tuesday because the gradual world smartphone marketplace weighed on profits, even supposing the chip trade persisted to accomplish neatly.

FILE PHOTO: The emblem of Samsung Electronics is noticed at its place of work development in Seoul, South Korea, August 25, 2017. REUTERS/Kim Hong-Ji/File Photo

Operating profit for the sector’s greatest chipmaker and smartphone maker rose five.7 % to 14.nine trillion gained ($13.three billion) in the second one quarter, Samsung mentioned in a regulatory submitting, in comparison with 14.eight trillion gained it had estimated.

The Apple Inc (AAPL.O) parts provider and smartphone rival mentioned running profit from the cell trade sank 34 % from a 12 months in the past, and warned of stiffer festival in the second one part because of the discharge of latest fashions.

The South Korean tech large added then again that call for for reminiscence chips, its greatest profits contributor by way of some distance, would stay sturdy in the second one part due to the growth of server knowledge facilities.

Revenue for the April-June length fell four % to 58.five trillion gained, widely consistent with Samsung’s previous estimate.

Like different large electronics corporations, Samsung faces demanding situations from the U.S.-China industry conflict, falling costs of a few reminiscence chips and the upward thrust of inexpensive Chinese-made handsets.

Samsung’s difficulties within the cell marketplace, which accounts for approximately 40 % of its earnings, had been exacerbated by way of its fresh loss of innovation to power sales of its top class Galaxy collection units. The cell trade booked 2.7 trillion gained in quarterly running profit.

Data launched by way of marketplace tracker Counterpoint Research in July confirmed Samsung’s newest Galaxy nine Plus top class handset were overtaken by way of Apple’s iPhone eight as the sector’s top-selling smartphone.

Competition from inexpensive Chinese manufacturers like Xiaomi Corp (1810.HK) and Huawei HWT.UL have already noticed Samsung lose marketplace proportion in China and India, the sector’s height smartphone markets.

Samsung regained its lead in India’s smartphone marketplace in the second one quarter due to cast sales in its funds phase consistent with Counterpoint Research.

While the cell trade struggles, the chip trade remained Samsung’s height earner in the second one quarter as sales to the cloud-computing and crypto-currency industries propped up DRAM chip costs at the same time as NAND flash reminiscence costs slipped.

Samsung’s chip unit posted a document 11.6 trillion gained running profit, up 45 % from a 12 months in the past.

Samsung stocks had been down zero.five % in early buying and selling, in comparison with zero.2 % drop within the broader marketplace .KS11.

Reporting by way of Ju-min Park and Heekyong Yang; Editing by way of Stephen Coates

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