In its latest earnings report, Samsung announced its record operating profits of $14.4 billion. Now the profits are interestingly not as a result of the smartphones alone, but due to the memory chips which power those smartphones. While the profits are impressive owing to the chip business, the OLED sales are slumping.
As Engadget reports, Samsung supplies OLED displays for the Apple iPhone X. Going by the slow sales, it might be an indication of the demand taking a hit. Samsung is expecting a follow-up version in the second half of this year when OLED panels in the smartphone industry will see a rebound in demand.
In terms of Samsung’s core strength, the Galaxy S9 family showcased strong sales while the Galaxy S8 performed even better than the successor. Samsung’s TV sales were also low. The company removed some mid-range to low-end products from its visual display business. The rising raw material prices also impacted Samsung’s profitability in the Digital Appliances Business.
Samsung wrote in its report, “All in all, the operating margin in the first quarter was 25.8 percent, up 6.2 percentage points YoY.” For the second half, Samsung is positive regarding components business. It expects strong demand for DRAM and increased sales of OLED panels.
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“Demand for server and mobile DRAM is expected to be robust and orders for high-density storage chips will grow as the price of NAND softens in the second quarter,” Samsung states. The demand for smartphone components will be sluggish which will impact the earnings. On the other hand, the Display Panel segment will seek profitability in OLED by cutting costs and improving yield, amid the weak demand for flexible products. For the mobile business, Samsung is expecting a decline QoQ owing to the stagnant sales of flagship models, weak demand, and increase in marketing expenses.