As one of the biggest tech companies in the world, Samsung is having a hard time. (Image: MySmartPrice)

Report: Samsung's profit falls more than half in Q2

Alfonsus Adi Putra
Business & Industry
Electronic Device
Jul 31, 2019
1342
On Wednesday (31/7), the world’s & S. Korean biggest smartphone and chip producer, Samsung Electronics, reported its Q2 net profit. In the report, Samsung recorded a 56% decrease in its net profit.

Some experts said that the trade dispute between South Korea (S. Korea) & Japan began to show its consequence for S. Korea, plus the ongoing trade war between the U.S and China.

For three months to last June, Samsung booked US$4.38 billion net profit, down by 56% compared to the same period in 2018 when Samsung enjoyed US$12.6 billion net profit.

For its semiconductor sector, Samsung recorded US$13.6 billion consolidated revenue and US$2 billion operating profit. It was almost a 71% blow compared to the amount last year. In the morning trade, its share went down by 2.58%.

In an official statement released by the S. Korean tech giant, Samsung is struggling with the weakness of the memory chip market despite the rising of international demands. Also, Samsung added that there was a change in the environment of international macroeconomics.

For its mobile phone sales, Samsung could not enjoy the shipment to the new mass market because of a huge expense in marketing and slower sales of the news flagship models. In early 2019, Samsung released its Galaxy S10 series which also announced Samsung as the winner to make the first 5G-powered smartphone.

The bad performance might also be caused by the delay of the Galaxy Fold due to the screen issue in April. Therefore, Samsung postponed the release date until the upcoming September.

- SAMSUNG AT STAKE IN TRADE DISPUTE –

In a statement above, Samsung also blamed “change in the environment of international macroeconomics”. This “change” referred to the national condition where S. Korea is currently in dispute with Japan.

As one of the integral chemical suppliers for S. Korea, Japan knows how to impose a fatal sanction to S. Korea. After an exchange of blows regarding Japan’s past sins against S. Korean labor, Tokyo just could not accept that the S. Korean just threw dirt on its face.

Therefore, Japan imposed import sanctions on S. Korean. Even more, Tokyo hinted a possibility for S. Korea to be excluded from getting preferential trade treatment.

The import sanction covers chemical export to S. Korea. These chemicals are important for the development of Samsung’s smartphones. Thus, by the chemical export restrictions, surely Samsung’s key products’ development is going to be on hold.

Namely, hydrogen fluoride gas and photoresists essential to memory chip producing, and fluorinated polyimide essential to producing displays for TV and smartphones. Galaxy Fold also depends on fluorinated polyimide for its display.

In other words, although Samsung “promised” September, it can be either delayed or released in unsatisfactory manners due to the trade dispute. It took Samsung almost 8 years to develop Galaxy Fold to revitalize the innovation its loyal fan bases are waiting for.

Some experts stated that due to the high amount of chemicals required for its production, it would be hard for Samsung to seek other chemical suppliers than Japan.

Either way, they could be disappointed, expecting the price of Galaxy Fold to rocket astronomically due to Tokyo’s sanction.

Samsung, as S. Korean biggest tech company and one of the world’s best, has been contributing tremendously to the S. Korean economy. By the underperformance, Samsung needs more than luck to ace 2019.

Source: https://www.afp.com/en/news/3954/samsung-profit-slumps-more-half-chip-market-weakens-doc-1j79kc2

Business , Industry , Technology , Gadget , S.Korea , Samsung , 5G , Trade-Dispute , Export-Import , Japan