Samsung Electronics misses forecast on lower phone sales

Samsung Electronics misses forecast on lower phone sales

Samsung Electronics Co. reported a lower-than-expected gain in the second-quarter earnings Tuesday, indicating an end to its streak of record-breaking financial results as sales of smartphones and display panels slowed while memory chip profit stabilized.

Samsung's Memory business posted its strongest ever quarter, with operating profits rising by 44% year-over-year to 11.6 trillion won ($10 billion), driven by continued strength in DRAM demand and pricing.

The Semiconductor Business posted consolidated revenue of 21.99 trillion won and operating profit of 11.61 trillion won for the quarter.

Revenue for the April-June period fell 4 percent to 58.5 trillion won, broadly in line with Samsung's earlier estimate.

Samsung's mobile business accounts for almost 40 percent of the company's sales.

Samsung Electronics has temporarily dipped in the second quarter but will post record earnings in the next three months, said Shinhan Investment on August 1, maintaining a "buy" recommendation and 64,000 won (US$57.26) target price.

The chip unit posted a record 11.6 trillion won operating profit in the second quarter, up 45 percent from a year ago and almost 80 percent of its total operating income.

South Korean tech giant Samsung's mid-range smartphone, Galaxy J7 Duo, has received a price cut in India.

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Adding to its troubles, its vice-chairman Lee Jae-yong, scion of Samsung's founding family, was jailed a year ago for his part in the sprawling corruption scandal that brought down former president Park Geun-hye.

Samsung shares slid 0.3 percent by 0620 GMT, compared with the flat broader market.

Samsung's chipmaking unit, which dominates the global market after the firm invested tens of billions of dollars to build and expand factories, provides chips for Samsung devices as well as those manufactured by competitors including Apple.

"We are hoping that such adoption will serve as a catalyst in the stagnated mobile market", said KyeongTae Lee, vice president of Samsung's mobile business, in a statement to analysts. The Note 9 has twice the memory as its predecessor but will be priced more or less the same, though it seems to have few other distinguishing features.

Samsung added that DRAM chip demand is set to remain steady as server data centres used in cloud computing continue to crop up.

"The year's second half is generally a peak season so smartphone and tablet demand is expected to go up", Samsung said.

The Galaxy Tab S4 will start shipping in on 10 August, one day after the Note 9's unveiling. Tablet lovers who like to be mobile will enjoy the LTE Cat.6 speed, but there will also be a WiFi version for those who don't need that.

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