Samsung May Suffer From A 56% Drop In Profit, But It Could Have Been Worse

Dhir Acharya - Oct 09, 2019


Samsung May Suffer From A 56% Drop In Profit, But It Could Have Been Worse

On Monday, the Korean giant projected that its third-quarter operating profit will fall by 56 percent to around 7.7 trillion won, equal to $6.4 billion.

Samsung is suffering from a slowdown in tech.

On Monday, the Korean giant projected that its third-quarter operating profit will fall by 56 percent to around 7.7 trillion won, equal to $6.4 billion. The company also said that there was a decrease of 5.3 percent in its revenue to 62 trillion won, which equals $51.8 billion. However, these numbers are both a bit better than analysts’ expectations, Thomson Reuters said; still, they indicate a sharp fall compared with the same period last year – a peak year for Samsung.

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Samsung's profit is projected to fall by 56%

The company did not reveal the reason behind these numbers, but the results are likely attributed to declining prices of its processors, and the weakness in the phone market. Samsung will release the report on the final results later in October.

In the same quarter one year ago, the company reported the biggest profit ever due to the strong demand for its components and memory chips. Not only does it use its own processors in its devices, but Samsung also sells them to Apple as well as other companies.

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The reason is probably lower prices and demand for its memory chips

The Korean firm is the largest TV and phone maker in the world, and it sells the most memory chips across the globe too. The company earns more revenue from semiconductors than all other vendors, which include Intel who used to lead the field in a long time. So when demand for chips and their prices go down, Samsung’s profit goes down too.

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The company is struggling to get people to buy high-end phones

In addition, the company is struggling to attract consumers to buy its pricey phones, just like the fight Apple and other players are having. Phone makers are having difficulties in upgrading their phones and make their product stand out from one another. While the newest, greatest smartphones are priced higher, and people are holding on to their current phones for longer.

Samsung has been relying on its more budget phones, the A-series in particular, to keep people buying. The Galaxy Fold doesn’t seem to have the ability to boost its profit at all.

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