Why You Can Trust CNET Samsung revenue declines, despite strong Galaxy S10 sales
Electronics giant's first quarter hurt by weakness in memory chip and display businesses.
The Galaxy S10 helped Samsung's bottom line in the first quarter.
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The smartphone slowdown isn't stinging Samsung as much as some may have predicted, thanks to strong sales from its new Galaxy S10 lineup.
Samsung said Monday that its first-quarter financial results were weighed down by weakness in its memory chip and display businesses, but that its newly launched flagship smartphone logged solid sales. Samsung said seasonal weakness led to decreased demand for smartphones , but the division's revenue increased in the quarter thanks to the Galaxy S10.
"Despite solid sales of the Galaxy S10, profitability in the mobile business declined [year-over-year] as competition intensified in the low- to mid-range segment," the company said in a statement. The quarter included only about a month of the lineup's sales.
The South Korean electronics giant recorded revenue of 52.4 trillion Korean won ($45.2 billion), 14% lower than last year's first-quarter revenue of 60.6 trillion won ($53.3 billion). The company's profit for the quarter came in at 6.2 trillion won ($5.3 billion), 60% below the first quarter of 2018's profit of 15.6 trillion won ($13.7 billion).
Samsung said its smartphone shipments were hampered "due to a lineup reorganization of mid- to low-end products." Revenue in its mobile operations dropped 4 percent from the previous year to 27.2 trillion won ($23.4 billion).
Samsung didn't detail Galaxy S10 sales figures, but its strong sales come despite a slowdown in the smartphone market. It's become harder for handset vendors to make huge changes in their devices and differentiate from one another. Prices for the latest and greatest phones have actually increased at the same time US carriers have gotten rid of subsidies. All of that has meant people are waiting longer to upgrade.
The Galaxy S10, which has three 4G models and a fourth 5G variant, arrived in stores in early March. The three higher-end models include an in-screen fingerprint reader and more camera lenses than their predecessors. All have dynamic AMOLED screens and Samsung's new Infinity-O Display that fills even more of the device's front.
Samsung's revenue was also hurt by a drop in memory chip prices due to declining demand from data centers. Samsung said this weakness was partially offset by sales of chips for mobile devices.
Its overall chip business and operations building processors for other companies declined because of "weak seasonality and inventory adjustments," Samsung said. Revenue in the memory business dropped 30 percent from the previous year, while the overall semiconductor business slid 27 percent.
Even Samsung's display panel business was hurt by smartphones. Revenue in the business declined 18 percent because of "weaker profitability in both mobile and large displays."
Looking ahead to the second quarter, the company said it expects market demand for smartphones to increase slightly in the second quarter and that its smartphone sales will increase in the second half of the year thanks to new models, such as its delayed foldable phone and a 5G handset.
It also predicts limited improvement in the memory chip market, as demand will likely begin to improve for major applications such as mobile products but price declines will likely continue. Samsung expects the market for flexible smartphone OLED screens to rebound and demand for high-end LCD TV screens to increase.
