Samsung Electronics has posted KRW6.2 trillion ($5.33 billion) in operating profit during the first quarter (Q1) of the year, marking a 60 per cent drop against KRW15.64 trillion registered during Q1 2018.

The Korean giant posted KRW52.4 trillion in consolidated quarterly revenue. First quarter earnings were weighed down by the weakness in memory chips and displays, although the newly launched Galaxy S10 smartphone logged solid sales, a company statement said.

 The Semiconductor Business saw a drop in memory chip prices as inventory adjustments continued at datacenter companies, while demand for high-density memory for mobile phones increased thanks to new flagship smartphones. Earnings improved at the System LSI and Foundry businesses over the sales of smartphone application processors (APs).

 The Display Panel Business reported a quarterly loss due to decreased demand for flexible displays and increasing market supplies for large displays.

 In the IT & Mobile Communications (IM) Division, despite solid sales of the Galaxy S10, profitability in the mobile business declined YoY as competition intensified in the low- to mid-range segment. In addition, amid softer demand in the overall smartphone market, revamping of the Company’s mass-market lineup led to a YOY decrease in sales volume.

Earnings from the Network Business increased, buoyed by the launch of 5G telecommunication service in Korea. Sales of premium TVs such as QLED TVs and ultra-large size models contributed to the YOY earnings growth in the Consumer Electronics (CE) Division.

Looking ahead to the second quarter, Samsung expects limited improvement in the memory chip market, as demand will likely begin to improve for major applications such as mobile products but price declines will likely continue.

 Demand is seen increasing for APs and CMOS Image Sensors in the System LSI and Foundry businesses. For Displays, Samsung expects higher demand for rigid panels.

The IM Division is set to focus on flagship products such as the world’s first 5G smartphone and the enhanced mass-market lineup with innovative cameras and display features. The CE Division is likely to report growth in the second quarter on strong seasonal demand for air conditioners and sales of new premium TVs.

For the second half of 2019, the Company expects memory chip demand for high-density products to increase, but uncertainties in the external environment will persist. A further recovery is seen for the Display Business as demand for flexible screens is set to rise on new smartphone launches.

 Growing competition in the mature TV and smartphone markets is expected to pose a challenge in the second half, and Samsung will focus on strengthening its leadership in the premium segment.

Over the mid- to long-term, the company aims to strengthen competitiveness of key businesses by diversifying applications and delivering innovations in components and new device form factors. Samsung will also continue to expand its capabilities in automotive technology, leveraging HARMAN’s solutions, and in artificial intelligence.

 In the first quarter, Samsung Electronics’ capital expenditure totalled KRW4.5 trillion, including KRW3.6 trillion spent on semiconductors and KRW0.3 trillion on displays. – TradeArabia News Service