Samsung mobile marks lowest profit since 2016 battery debacle

Samsung's mobile business has posted an operating profit of 1.5 trillion won for the fourth quarter of 2018 -- its lowest since the Galaxy Note 7 battery debacle in 2016.
Written by Cho Mu-Hyun, Contributing Writer

Samsung Electronics has posted operating profits of 10.8 trillion won and revenues of 59.27 trillion won for Q4 2018, the company has announced.

The company's operating profits drop of 28.7 percent is mostly due to lowered demand for its memory chips -- which previously helped it clinch record profits for two years -- with phone sales also being a noticeable contributor to Samsung's decline in profits.

Samsung's mobile business contributed an operating profit of 1.5 trillion won, its lowest since the Galaxy Note 7 battery debacle back in 2016, when it posted only 100 billion won in profit for the quarter at the time.

The business' profit has steadily declined over the past year, starting from 3.8 trillion won in the first quarter to 2.7 trillion won in the second, before dropping to only 2.2 trillion won in the third.

The lowered demand for smartphones in general and lowered average sales price (ASP) due to heated competition from the low to mid-end from Chinese rivals is the chief cause of the decline.

"For the whole of 2019, demand for smartphones is expected to maintain the same level seen in 2018 while market [average selling price] is projected to rise due to a trend toward adopting high-end features such as large screens, higher memory capacity, and multi-cameras. The environment overall will remain challenging due to the sluggish growth of the global smartphone market and material cost burden," the company said in a statement.

Samsung has said the upcoming Galaxy S10 will prop up sales, and that it will lead trends in the market by launching foldable and 5G devices to ensure sustainable growth.

The South Korean tech giant also said it will increase user retention by strengthening connectivity between devices by expanding Bixby, its AI platform.

In memory, the business hopes to recover during the second quarter of this year from demand in smartphones. NAND will recover with increased demand across all applications from price drops and orders for high-density premiums. DRAM will also recover solid demand from servers.

The consumer electronics business was the rare positive note as it posted operating profits of 680 billion won thanks to growth in TVs from the year's end peak season.

In displays, OLED continued to enjoy high demand but LCD was competitive, posting operating profits of 970 billion won, Samsung said.

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