Samsung's Profits Plunge by Half
09 January, 2020
Samsung Electronics posted a historic drop in operating profit last year due to a slump in the price of memory chips, its flagship business.
But there are hopes that the slump has bottomed out and the situation will improve as it fared better than expected in the fourth quarter last year.
In a preliminary performance report on Wednesday, Samsung said operating profit amounted to W27.71 trillion in 2019, a 53 percent decrease from 2018 and the lowest since 2015 (US$1=W1,178). The main cause was the price crash in DRAM and NAND flash chips.
Sales fell 34 percent to W229.52 trillion.
In the last quarter, sales only slid 0.5 percent on-year to W59 trillion, while operating profit shrank 34.3 percent to W7.1 trillion, about W600 billion more than market expectation.
"This is because we earned a bigger profit in semiconductors and high-end smartphones than expected," a Samsung executive said.
The outlook for this year is rosy since memory chip prices have started to rise and inventory has decreased. An industry insider said, "What seems to be positive is that NAND flash demand is growing as a result of 5G commercialization and an increase in data center servers."
Another positive sign is brisk sales of new high-end smartphones like the Galaxy Fold. Samsung set a goal to sell 5 to 6 million Galaxy Folds this year, more than 10 times that of last year.
Lee Seung-woo at Eugene Investment and Securities speculated, "Samsung's sales and operating profit will increase 12 percent and 41 percent to W260.6 trillion and W38.3 trillion this year."
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