Samsung Profit Lags Reduced Estimates on Chips and Smartphones

Samsung posted profit that missed recently reduced analysts’ estimates, according to Bloomberg. Net income fell to 5.11 trillion won ($4.4 billion) in the three months ended March, the company said in a filing. That compares with the 5.7 trillion won average of estimates. Operating profit was 6.23 trillion won, Samsung said, confirming preliminary numbers released earlier this month. Sales were 52.4 trillion won.

The slowing expansion of data centers around the world has hurt demand for Samsung’s memory, while Chinese competition has eaten into its smartphone business. Earlier this month, plunging chip sales led Samsung to report its worst operating profit in years, and the company indefinitely postponed the release of the Galaxy Fold after reports of screen failures. Samsung now predicts improvement in the second half of the year as customers work through inventory issues and shift to higher-capacity chips.

Income from the chips unit still accounted for 4.12 trillion won and most of the company’s profits. Contract prices for 32-gigabyte DRAM server modules, used to store data on PCs and servers, fell by 38 percent in the March quarter, according to InSpectrum Tech. Prices for 128-gigabit MLC NAND flash memory chips, which store data on mobile devices, dropped by 23 percent.

Samsung’s mobile division posted 2.27 trillion won in operating income. While the company remains the world’s biggest phone maker, its share of the market has been shrinking as Chinese rivals Huawei and Oppo catch up. The display division lost 560 billion won for Samsung, which supplies OLED screens for Apple’s iPhones. Samsung’s consumer electronics unit, which includes TVs and appliances, recorded profit of 540 billion won.