Samsung's profit to dwindle in second quarter of 2018

Samsung is due to post its guidance for the second quarter of 2018 on Friday, but the information it will most likely contain is no secret.

Continuing the trend from this year's first quarter, smartphone sales are expected to drop even further, following the first quarter's 2% drop.

Experts point out two main reasons for the unsatisfactory results of the company that can be categorized roughly as an external and an internal one.

The blame for the internal one, of course, falls solely on Samsung. Their latest releases failed to make people excited for their products, which naturally hinders sales. While the Galaxy S9 and S9+ were objectively better than their predecessors, many consumers and specialists alike thought the upgrade was marginal and decided to skip a generation. Now Samsung is hoping to shake things up with the release of the new Galaxy Note 9, but if leaked information about the device is to be believed, the Note line is matching the progress path of the S-series, as in: expect no jaw dropping new features. Considering that the Galaxy Note is already a niche high-end device, Samsung executives might end up disappointed once more at the end of the year.

What doesn't make Samsung's situation any better, is that they are challenged by competitors on all fronts. Apple's flagship device, the iPhone X, despite sporting the controversial notch, continues to sell well even when put against the competition's 2018 top models. Meanwhile Chinese tech giants Huawei, Oppo, Vivo and Xiaomi are not only dominating the Chinese market, but are starting to get traction in the west, nipping away from the market shares of well-established manufacturers.

All that said, don't feel bad for Samsung just yet (as if you were). It still holds the number one spot for smartphones sold a year, and while its mobile division might be underperforming, the chip manufacturing part of the company is more than making up for it. Profit from chips is expected to rise 50% compared to last year and is now responsible for almost a third of Samsung's revenue. And with demand for their silicon products staying strong, these results are expected to be repeated.

While Samsung definitely has things to work on, it takes more than a slower quarter to disturb a company of that scale. Hopefully, once the right cogwheels start turning, we'll see some truly inspiring products.

source: Reuters