Weak Apple iPhone sales are hurting Samsung

Weak Apple iPhone sales are hurting Samsung
Lower chip prices and a drop in demand for its OLED panels led Samsung to announce in a filing Tuesday morning that its first quarter profit won't meet analysts' expectations. It was just last week when the company said during its annual stockholder's meeting that slower growth in the global economy, combined with weaker memory chip sales, would be a drag on earnings this year.

Samsung is scheduled to report its first quarter earnings next week. Market estimates provided by Refinitiv SmartEstimate call for the company to report an operating profit of 7.2 trillion won (equivalent to $6.4 billion USD) for the period from January through March. That would be a 54% decline year-over-year from the 15.6 trillion won profit that Samsung recorded during the same period last year. Revenue is expected to decline from $60.6 trillion won to $53.7 trillion won, a drop of 11.4%.

Earlier this month, Samsung released the Galaxy S10e, Galaxy S10 and Galaxy S10+. The "lite" Samsung Galaxy S10e earned a 9.2 (out of 10) in our review of the model, while the other two phones each scored a 9 (again, out of 10).


Besides introducing its new flagship models, Samsung launched its new wireless Galaxy Buds this month as well. Some of the initial sales from the accessory and Galaxy S10 line will be included in the first quarter results. Before the new units hit the market, Samsung was struggling with 2018's Galaxy S9 and Galaxy S9+ as the company had to resort to heavy discounts to help clear the warehouse. Even the Galaxy Note 9 has not been bullet-proof, although the device might have some life left since the Galaxy Note 10 is still a few months away.

Limited nature of Samsung Galaxy Fold will probably mute its contributions to the bottom line


Next month, Samsung will launch the Samsung Galaxy Fold; the device has a 4.6-inch exterior screen and opens to become a 7.3-inch tablet. While this model carries a very high price tag of $1,980, it initially will be available in limited quantities. As a result, the phone might not be able to lift Samsung's earnings during the second quarter.

Selling handsets might be the sexy part of Sammy's business, but selling components to rivals is really Samsung's bread and butter. The company, which supplies rival Apple with AMOLED panels and other parts, was said to have made $110 from 2017-2018 on every iPhone X sold. It most likely continues to derive huge profits on each iPhone sold, but sales of the 2018 models are sluggish at best, contributing to the decline in Q1 revenue and profits. In fact, the entire smartphone business has seen tepid demand, and this has had a very negative impact on Samsung's business as a supplier to handset manufacturers.

The news doesn't appear to be terribly shocking to investors. In Korea, Samsung's shares are trading at 45,200 won ($39.94 USD), down .66% on the day.

FEATURED VIDEO

15 Comments

1. Vokilam

Posts: 1031; Member since: Mar 15, 2018

next, samsung will blame apple for note 7 fires. but this proves that samsung very heavily relies on apple for it's income, because their ASP is literally in the $250 range (devices that dont make samsung any money).

2. Xavier1415

Posts: 144; Member since: Feb 26, 2012

Are you high? Lol

9. Sammy_DEVIL737

Posts: 1504; Member since: Nov 28, 2016

Just like how Apple blamed Samsung Display for expensive iPhone X.

3. Guseinguliev

Posts: 76; Member since: Mar 04, 2019

Spending money on marketers, if I don’t like your processor, what will the marketer do to me? force to buy something?

4. Seatech21

Posts: 59; Member since: Jan 01, 2018

Keep charging 1400$ for a phone, yeah that will help.

7. Leo_MC

Posts: 6386; Member since: Dec 02, 2011

Why do you think 1400$ phones are a problem when there also are 100$ Samsung phones?

5. CreeDiddy

Posts: 2118; Member since: Nov 04, 2011

This is how big and critical the iPhone is...Poor Samsung Semiconductor....LOL! People fail to realize that Samsung only sells less than 60-70 million S10’s a year. With a major portion of their sales comes from S8’s and S9’s. Notes barely make up less than 20 million. So how can Samsung tell the public that they sell over 300+ million phones. Apparently not all Galaxy phones. If they had an ASP of over $700 they wouldn’t complain of sliding chip maker business. When the ASP is set lower than $350 it takes a doubling effort just to match Apple.

10. midan

Posts: 2557; Member since: Oct 09, 2017

"People fail to realize that Samsung only sells less than 60-70 million S10’s a year." Try more like 40 million.

6. cmdacos

Posts: 3818; Member since: Nov 01, 2016

I think they will be fine with Huawei now planning to leverage Samsung Display panels.

8. Leo_MC

Posts: 6386; Member since: Dec 02, 2011

I have a feeling that’s never going to happen.

11. iloveapps

Posts: 408; Member since: Mar 21, 2019

This is so sad that the number one smartphone maker continuously had a bad profit since S3 or S4.

12. CQuine unregistered

I don't know how this could be hurting Samsung.. if someone orders components from me I WANT MY MONEY! whether they can sell their crappy phones or not is NOT MY PROBLEM! I WANT MY MONEY FOR MY COMPOMENTS! How is this so hard to understand? Everybody is hurting except for the scum that is Apple?

13. Vokilam

Posts: 1031; Member since: Mar 15, 2018

Apple evidently made up bigger portion of Samsung profit - instead of calling Apple “scum”, Samsung fans should say “thank you”.

14. CQuine unregistered

They are scum.. trust me bro they may have trendy stuff but they are scum.. go watch a few vidz by Louise Rossman on youtube.. this company only sees money nothing else

15. LawnBoy

Posts: 99; Member since: Feb 23, 2019

Y'all are smoking dope. Samsung's Mobile division represents about 38% of total company revenue. iPhones make up about 62% of Apple's total revenue. Samsung is a conglomerate of many other industries while Apple is really a 1, possibly 2 trick pony. Once the iPhone collapses due to increased competition, Apple as a company is in trouble. Samsung, will continue on because even if their phones slow, they wi be selling screens and chips to Chinese and other phone makers

Latest Stories

This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.