The first quarter of 2019 was an exciting period for Samsung’s mobile phone business as the company raked in profits worth almost $2 billion with the strong demand of the Galaxy S10 series devices. In its earnings call for the second quarter, Samsung revealed that there was a growth in the overall shipment of smartphone units with the revamped Galaxy A series, thanks to the strong demand for smartphones like the Galaxy A50 and the Galaxy A70. However, there was a decline in the revenue from flagship devices which led to a lower profit in Q2.
Samsung blamed the stagnant demand for the Galaxy S10 series and the anticipation towards the upcoming Galaxy Note 10 and the Note 10+ for this reduction in revenue. Against the first quarter when Samsung’s mobile unit made 2.27 trillion won (~$1.95 billion), the profit in the second quarter slid down to 1.56 trillion won (~$1.32 billion). Samsung noted the “growing competition in the mid- to low-end segment and inventory adjustments of older models” caused a decline in the profit margin. Meanwhile, the rise in the adoption of 5G in Samsung’s home turf, South Korea, helped increase the profit for its Networks division.
It was also asserted that the uncertainty in global trade and economy may be expected to remain weak. Here, Samsung seems to be referring to the trade rift between the U.S. and China which has led to the blacklisting of Huawei. At the same time, Samsung showed optimism about the growth in sales due to the launch of major launches in the near future, including the Galaxy Note 10 series and the Galaxy Fold. The Galaxy Note 10 arrives next week while the Galaxy Fold launch has been pegged for September. The latter was initially meant to launch in April but widespread reports by journalists about displays on the Galaxy Fold not being able to sustain the fold resulted in Samsung pulling the devices and reengineering the design to fix the issue. We hope that the launch is not delayed any further.
In the meantime, both LG and Sony also reported a decline in their smartphone business, and this appears to be in line with the global decline in the smartphone industry. India remains to be an exception for the second quarter too with nearly 3% growth. Furthermore, as per certain reports, Samsung appears to be recovering some of the lost market share with the Galaxy A and the Galaxy M series.
Source: Samsung Newsroom
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