Samsung mobile profit slips again as semiconductor more profitable

The profit drain from Samsung Electronics' mobile group continues, as its semiconductor business is now the profit driver of the group.

Samsung mobile's fall from grace has continued through the first quarter of 2015, as the group's profit fell 57 percent from the same time last year.

For this quarter, the IT and mobile group contributed 2.74 trillion won in profit, an increase of 0.78 trillion won from last quarter, but a significant drop from the 6.43 trillion won from Q1 2014.

On the sales side, the mobile group made 25.89 trillion won in revenue, representing a 20 percent drop on last year and a 1.5 percent fall from last quarter.

Samsung continued to blame seasonality and weakening global exchange rates for the ongoing decline.

SangHyo Kim, vice president of investor relations, admitted that its mobile business continued to decline, but believes the company can regain growth momentum again by focusing on new, "competitive" technologies such as flexible displays, wireless charging, and Samsung Pay.

During the quarter, the company shipped a total of 99 million handset units, with just over 80 percent of that number represented by smartphones. A majority of shipments were delivered to Southeast Asia and the Middle East, the company said.

JinYoung Park, vice president of Samsung's mobile communications business, added that while it's still too early to predict shipment volumes of the Galaxy S6 and S6 Edge -- the company's latest premium smartphones to be released -- Samsung is confident that the devices will outperform the sale of the Galaxy S5, and therefore return the company to potential growth.

Similarly, the company's tablet business continued to decline, and it is expected that it will continue to travel this way for the rest of the year, as the global tablet market is predicted to slow.

"Market demand for the smartphone is expected to continue to increase, compared to the last year, due to global expansions of LTE services and growth in emerging markets. However, tablet market growth is expected to slow down," Park said.

"In 2015, we will continue to do our best to increase our smartphone business with our competitive product line-up. We plane to solidify our leadership in the premium handset market with differentiated features in our products."

Overall, Samsung Electronics made 5.98 trillion won in profit, a drop of 30 percent from the 8.49 trillion won in profit from this time last year, but an increase on the 5.29 trillion won for last quarter. Revenue wise, the company made 47.12 trillion won, a drop from the 52.73 trillion won of last quarter, and the 53.68 trillion won posted in Q1 2014.

Samsung Results 1Q 2015
(Image: Screenshot by Chris Duckett/ZDNet)

The shining light for the company is its device solutions group that contains its semiconductor and display panel business. Year on year, profit is up for the group by 81 percent to 3.39 trillion won, with the display business contributing 0.52 trillion won -- a turnaround from the 0.08 trillion won loss posted last year.

Of the numbers disclosed by Samsung Electronics, its memory business within the semiconductor division was the only item to post an increase in revenue, up 2 percent.

On the other hand, Samsung Electronics' consumer electronics group posted a 0.14 trillion won loss. This time last year, the group made 0.19 trillion won in profit.

Jeeho Baek, senior vice president of the semiconductor business, said server demand for the datacentre continued to be strong due to the company's delivery of DDR4 and low-power DDR4, and the expansion of 20-nanometre migrations. At the same time, the demand for its NAND solution remained stable.