Earnings calls are not something we normally keep a close eye on here at Ausdroid but when you see the biggest brand in Android drop 29 percent compared to the same time last year you sit up and take notice. At their earnings call overnight Samsung have announced such a drop for them.

The 29 percent drop in profit has been mostly attributed to a lower demand for their chipsets by Samsung in an unusual earnings statement aimed to “ease confusion” for investors. This is the first time they have commented on an earnings report since 2014. Samsung also said that the profit will remain “subdued” for the first quarter of 2019 but is expected to pick up in the second half of the year as their customers release new smartphones.

Samsung make memory and processor chips for companies including Apple and Huawei phones with these sales accounting for close to 40 percent of their overall sales.

Smaller investment from data centres, a really bad smartphone market in China, and impact from the U.S.-China trade war have all hit Samsung’s chip businessKim Yang-jae, Analyst at KTB Investment & Securities

For the fourth quarter of 2018 Samsung had consolidated sales of “approximately 59 trillion Korean won” with a consolidated operating profit of “approximately 10.8 trillion Korean won”. Korean disclosure regulations are such that the ranges are not allowed to be reported and as such these figures are a median of the ranges that have also been provided.

2018 3Q and 2017 4Q consolidated figures based on K-IFRS are as follows

(in trillion won) 2018.3Q 2017.4Q
Sales 65.46 65.98
Operating profit 17.57 15.15

After Apple reported their expected drop in profits for the same period there was a large reaction in the market and this time there was also a response in the market to Samsung’s report. Samsung it seems are starting to see the competition come at them hard with Huawei snapping at their heels in many markets and actually overtaking them in others.

Many believe that chip sales have “passed their peak days” and as such Samsung are going to have to find new revenue streams or make something very compelling if they are to claw back some of these profits. Whether it is in the chip manufacturing or one of their other divisions such as smartphones it should not matter but of course we here at Ausdroid are hoping for some smartphone innovation.

Source: Samsung Newsroom.
Via: Reuters.