Samsung Q2 profit dented by low S9 sales

Samsung's chip business posted a record second-quarter profit, but poor Galaxy S9 sales have put a dent in the total, breaking the company's record streak.
Written by Cho Mu-Hyun, Contributing Writer

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Samsung Electronics saw its record profit streak halted in the second quarter of 2018 despite strong chip sales due to lower-than-expected performance of the Galaxy S9.

The South Korean tech giant posted an operating profit of 14.87 trillion won ($13.3 billion) and revenue of 58.48 trillion won, a rise of 5.2 percent and a drop of 4 percent, respectively, from a year ago.

It is lower than the market consensus of 15.3 trillion won estimated before the announcement.

Samsung's semiconductor business posted its highest-ever operating profit of 11.61 trillion won and revenue of 21.99 trillion won. High demand from datacentres secured the profit, the company said.

Mobile, however, saw an operating profit of 2.67 trillion won and revenue of 24 trillion won. It is a drop of more than 30 percent from the first quarter's 3.77 trillion won, signifying that the interest for the Galaxy S9 waned quickly after launch.

It is also a steep drop from operating profit of 4.06 trillion won a year ago.

Earnings decreased due to increased marketing expenses amid declining revenue attributable to lower-than-expected sales of the Galaxy S9, Samsung said in a statement.

High-priced flagship phones are becoming less popular due to price-competitive rival products with near identical specification, market saturation, and lack of differentiators that justify high price tags.

The company's consumer electronics business saw profit of 510 billion won, one of its best in recent years thanks to the popularity of its QLED TV. Its display business saw profit of 140 billion won, which was significantly lower than the previous quarter due to lower demand for flexible OLED.

Samsung will unveil its next-flagship phone, the Galaxy Note 9, on August 9, with the phone to go on sale that month. The South Korean tech giant has hinted at the phone's long battery, processing speed, and storage through teaser videos.

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