IT WAS GOING SO WELL FOR SAMSUNG in 2018, until Christmas came calling and the South Korean tech firm suffered a sharp drop in profits after a rough three months of flogging memory chips.
This drop in demand for the chips, which Sammy plonks under its semiconductor business arm, was fingered as the culprit for the firm's overall profit drop, which Samsung has predicted was going to happen.
Samsung's earnings report for Q4 2018 saw the firm post revenues of 59.27 trillion won (some £40.5bn), a 10 per cent decrease compared to the same quarter in 2017. Operating profit fell by 29 per cent to 10.8 trillion won (£7.3bn), which isn't an amount you'd be easily able to get in petty cash.
Nevertheless, a decline is a decline, and Samsung pointed the blame at "macroeconomic uncertainties and adjustments in inventory levels" in its memory business.
It would look like Samsung has fallen afoul to the overall slowdown of smartphone sales in 2018, meaning the demand for memory chips for smartphones has slacked off. Given a phone from two years ago is still pretty decent for all but the most demanding apps, we're not surprised this is the case.
Sadly for Sammy, it also reckons smartphone sales won't pick up much in the first quarter of 2019, as people tighten their belts after forking out on Christmas gifts or wait to see what MWC 2019 throw up.
But with the Galaxy S10 on the horizon, Samsung is hoping that'll have people in a buying frenzy and prop up its revenue moving into the second quarter of the year.
"Overall smartphone shipments are likely to remain at a similar level QoQ as shipments of the Company's mass-market models have temporarily declined due to a lineup reorganization. This reorganization is being carried out to better promptly respond to rapid changing market trends and the needs of target customers," Samsung said.
"For the whole of 2019, demand for smartphones is expected to maintain the same level seen in 2018 while market ASP is projected to rise due to a trend toward adopting high-end features such as large screens, higher memory capacity, and multi-cameras. The environment overall will remain challenging due to the sluggish growth of the global smartphone market and material cost burden."
It's not the most overly-cheery outlook, but we don't feel too sorry for the company which posted an operating profit of £40.2bn for the whole of 2018. That amount could probably give the company the ability to retire itself to a small island somewhere and spend its twilight years blowing fish out of the water with dodgy Note 7 handsets. µ
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