Weak phone demand catches up with Samsung

Bloomberg

Even as most global smartphone makers felt the impact of slowing smartphone sales months ago, Samsung Electronics Co. managed to weather the downturn. Not any more.
The maker of Galaxy phones reported that operating income rose to $13.2 billion in the three months ended June, short of the 15.3 trillion-won average of analysts’ estimates, according to preliminary results.
Smartphone shipments started to cool last year after a decade of robust growth, but Samsung
had managed to deliver results exceeding projections, thanks to demand for memory. Now, weaker sales of its Galaxy S9 devices unveiled in the first three months of the year are starting to
have an impact on the Suwon, South Korea-based company, even as it dominates in both DRAM and NAND markets. Sales of organic light-emitting diode screens to Apple Inc. have also not lived up to expectations, while the growth of semiconductor prices has been slowing.
“While chip sales keep rising, smartphones aren’t looking good,” said Jung Sang-jin, a fund manager at Korea Investment Management. “While chips and phones cancel each other out in profit, the weakening won may work in Samsung’s favour in the second half.”
Sales for the second quarter fell to 58 trillion won, compared with the 60.8 trillion won average projection compiled by Bloomberg. Samsung won’t provide net income or break out divisional performance until it releases final results later this month.