Samsung Electronics, the world’s largest mobile and memory chip manufacturer, saw net profits fall by more than half in the third quarter, it said Thursday, October 31, in the midst of a continuing global chip market downturn.
Net profits were 6.29 trillion won ($5.40 billion) in the three months to June, it said in a statement— down 52 percent year-on-year.”Memory Business earnings slowed substantially year-on-year as memory chip prices continued their downward trend,” said the company. The company is the giant Samsung Group’s flagship subsidiary, by far the largest of the family-controlled conglomerates known as “chaebols” that dominate business in the 11th largest economy in the world.
Yet, as global supply rises, it has been battered by dropping memory chip prices in recent months. Samsung is also facing the threats of the U.S .- China trade war and the stringent export restrictions placed on key products by Tokyo in the middle of a conflict over forced labor in wartime with Seoul.
Operating profits dropped 55.7 percent in the third quarter to 7.8 trillion won, the firm said, while sales fell 5.3 percent to 62 trillion won.
According to sales tracker IHS Markit, the South Korean tech titan leads the global smartphone market with a 23% share, trailed by Chinese competitors Huawei and Oppo, with Apple fourth. The premium smartphone market has grown fiercely competitive and overall sales have cooled as a lack of major innovation has resulted in people waiting longer to upgrade to new models.
But Samsung said phone profits were boosted by strong sales of the Galaxy Note 10 and its A-series devices, along with larger mass-market model margins.
“The company has extended the product range for 5 G and introduced the Galaxy Fold, showing the engineering leadership of Samsung,” he said.
Earlier this year, after South Korea won the global race to commercially launch the world’s first nationwide 5 G network, Samsung launched its top-end S10 5 G smartphone ambitiously.
But in April it was embarrassingly forced to delay the release of its hotly anticipated Galaxy Fold phones after testers reported screen glitches within days of use with early devices. In another failure earlier this month, with its fingerprint scheme, it also revealed a major flaw allowing other people to open their top-end smartphones.
In addition to the woes of Samsung, his vice president Lee Jae-Yong’s retrial started last week over a widespread corruption case that could see him go to prison.
During the case, he is not being held in custody, but it is expected to last for months and a guilty verdict would deprive the company of its top decision-maker.
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