Samsung reports 56% profit decline in Q2 on weak memory chip sales

Apple supplier and smartphone segment competitor Samsung Electronics on Tuesday reported a 56% decline in operating profits for the second quarter of 2019, blaming the downturn on continued weakness in the global memory chip market.

Slightly beating a bleak earnings forecast issued in early July, Samsung posted a profit of 6.6 trillion won (about $5.6 billion) on revenues of 56.13 trillion won for the three-month period ending in June, reports CNBC.

The result follows an equally dismal first quarter that saw profits dip 60% in the worst quarterly performance for the company since 2016. In both consecutive quarters, Samsung identified memory chip sales as the main contributor to its financial woes.

"The weakness and price declines in the memory chip market persisted as effects of inventory adjustments by major datacenter customers in the previous quarters continued, despite a limited recovery in demand," Samsung said in a statement on Tuesday.

Tuesday's results mark the third consecutive quarter of year-over-year profit declines for the Korean company.

Samsung would have seen an even lower number for quarter two if not for a one-time payment from Apple. The iPhone maker reimbursed the Korean tech giant an estimated 800 billion won for unfilled OLED orders after negotiations to find an alternative contractual solution failed.

Looking ahead, Samsung sees a path to return to profit growth in the coming months, but warns of overall market volatility due to "increased external uncertainties." A number of factors are putting pressure on device makers, from the U.S.-China trade war to a stagnating smartphone industry.

23 Comments

Fatman 513 comments · 8 Years

About 5 years ago

So, I made an s-load of money today in my Apple stocks holdings ... I’m a large shareholder, so I love high profits... but even this bothers me. Chip prices are plummeting, yet Apple still puts 128GB in a laptop. That is pure greed. 128GB costs them about $12.

Soli 9981 comments · 9 Years

Fatman said:

So, I made an s-load of money today in my Apple stocks holdings

You don't make or lose money in the stock market until you sell.*

* Or the company is dissolved, you get dividends, etc., but putting all the cavers into this rule of thumb just adds too much clutter.

seanismorris 1624 comments · 8 Years

Soli said:

Fatman said:

So, I made an s-load of money today in my Apple stocks holdings

You don't make or lose money in the stock market until you sell.*

* Or the company is dissolves or you get dividends, but putting all the cavers into this rule of thumb just adds too much clutter.

Both paper money and digital money (or stocks) are strange concepts, both have little intrinsic value but we’ve decided as a society they do...

One is paper and ink, the other is ones and zeros...

From a logical perspective, the value of the persons Apple holding increased, so saying he “made money today” is reasonable enough...

But, until he converts it into physical assets...both are kind of worthless. What’s the difference between Bitcoin and the US Dollar? One, is said to have value because people have decided it has value. The other... the same, but maybe it’s also a contract controlled by a specific entity.

Anyways, the BS I just wrote is said to have value as data. It could be used to manipulate someone else’s ideas, opinions or actions... so did I just make money? Physical BS might have more value..

It’s a strange world we live in. Sometimes I think “life” is just us brainwashing ourselves and others.

MplsP 4005 comments · 8 Years

It’s rather interesting that memory chips make up that much of Samsung’s profits. Historically, the memory market has been volatile with thin Margins, so having that much of your profits linked to memory chips doesn’t seem like a sound strategy.

SpamSandwich 32917 comments · 19 Years

Too bad, so sad.