Samsung continues tough year with expectations of halved Q3 profits

Samsung's third quarter profits dropped 56% from the previous year due to continued lowered demand for memory chips, but the Galaxy Note 10 is expected to take the mobile business out of its slump.
Written by Cho Mu-Hyun, Contributing Writer

Samsung Electronics expects third quarter operating profits of 7.7 trillion won and revenue of 62 trillion won, the conglomerate announced in its preliminary earnings guidance on Tuesday.

This would be a 56% drop for its profits compared to a year ago, and would also be a 5.3% fall in revenue.

Samsung saw its second quarter profits halved earlier this year, warning at the time that there would be persistent uncertainties ahead.

This is a stark contrast to last year when Samsung posted its highest-ever quarterly profit in the third quarter which was largely thanks to unprecedented demand for memory chips.

But since the fourth quarter, prices and demand for memory have nosedived and are yet to return to an upward trajectory.

However, Samsung's third quarter operating profits and revenue are expected to rise 16.7% and 10.5%, respectively, from the previous quarter, likely a direct boost from the launch of the Galaxy Note 10 in August.

The company's mobile business posted an operating profit of 1.56 trillion won in the second quarter, but analysts in South Korea expect it to hit 2 trillion won for the third quarter thanks to the flagship launch.

The mobile business is currently attempting to reduce costs in its low to mid-tier smartphones, having shut down the last of its factories in China. In the place of factories, Samsung will rely on local original device makers to develop and produce their devices instead.

Meanwhile, compatriot LG Electronics is expecting operating profits of 781 billion won and revenues of 15.7 trillion won, a rise of 4.3% and 1.8% from a year ago, respectively.

LG's home appliance business is expected to contribute the lion's share of the company's profits and revenue yet again, while the mobile business is likely to report a significant reduction in its losses despite it being the main thorn in its overall profit for years. LG transferred its phone production from South Korea to Vietnam earlier this year in a bid to better control costs.

Both Samsung and LG will release their full earnings report at the end of the month.

Related Coverage

Samsung reorganises Chinese phone production

By closing all of its phone factories in China, Samsung will rely more on original device makers to create its phones going forward.

Fold fight! Can Surface Duo deliver more productivity than Galaxy Fold?

It looks like Microsoft may have just stalled some Galaxy Fold sales with the Duo announcement. The Duo brings two larger displays, pen support, and a more robust design, but it's not as functional as a phone.

Six days with the Samsung Galaxy Fold: Is it really as fragile as Samsung warns?

Samsung's new Galaxy Fold is an engineering marvel and presents a huge leap forward in smartphone innovation. While you need to use caution with the folding plastic OLED screen, the rest of the phone may be more durable than Samsung cautions.

KT and Samsung to apply 5G for 'smart hospital'

5G networks will be installed at Samsung Medical Center's proton therapy center and cancer hospital.

5G and foldable phones: The promises and problems (TechRepublic)

TechRepublic's Karen Roby and CNET's Jessica Dolcourt discuss the current and future state of the smartphone industry and the much-anticipated benefits of 5G.

Editorial standards