Samsung Operating Profits Nose-Dive 40% in Q4 2018 Due to Declining Chip Sales

cageymaru

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Samsung has announced that its 40% decline in operating profits in Q4 2018 is due to a weak market demand for memory chips. Samsung posted an operating profit of 10.8 trillion won which is 38.5% lower than the 15.1 trillion won it posted in the previous quarter. This is the lowest operating profit that Samsung has posted since Q1 2017. Samsung shares closed down 24% last year and fell another 1.68% Tuesday. Market analysts are optimistic that its foldable phone technology and new CPUs will help the company to recover its profitability in the second half. Analysts expect Samsung to reduce its chip production capacity to achieve a recovery in the second half.

In a move to ease market confusion, the company issued a rare statement saying weak memory chip sales and escalating market uncertainties were to blame for its lower-than-expected earnings. In the first commentary the company had attached to any of its regulatory filings since late 2014, Samsung said profits would remain weak in the first quarter of this year, but could be expected to rebound in the second half on the anticipated recovery of the memory chip market. The company added a comment four years ago when its smartphone business hit bottom.
 

funkydmunky

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I can't see the demand changing that drastically in one quarter. They either over-shipped the last quarter or something else. Prices have been consistently high so why the drop?
 

Dead Parrot

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Between Samsung, LG and Apple, seems we have likely reached peak smartphone. At least for places that can afford $700+ phones. And 4K and 8K TVs aren't likely to save the day when the average viewer has problems getting affordable 4K content. And many TV viewers really don't care. When they don't notice they are in letterbox mode, eye blinding store mode or smoothing mode, why would they get bothered to buy a 4K TV?
 
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What kind of DRAM exactly are they referring to? LPDDR, DDR, GDDR, is it the phone market, or the Laptop/Desktop market, or industrial/enterprise applications that is lacking? I am 10000% sure people want DDR4 sticks especially the B-Die Samsung Ram sticks as they tend to OC a bit better so maybe just maybe strop price fixing and allow reasonable prices and people will buy again like they used to also bring the price down on the SSDs there is zero reason for the price gouging, when you make shit in house everything is cheaper pass that along to the customer instead of trying to use Apple's tactics.
 

GlowingGhoul

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Between Samsung, LG and Apple, seems we have likely reached peak smartphone. At least for places that can afford $700+ phones. And 4K and 8K TVs aren't likely to save the day when the average viewer has problems getting affordable 4K content. And many TV viewers really don't care. When they don't notice they are in letterbox mode, eye blinding store mode or smoothing mode, why would they get bothered to buy a 4K TV?
Exactly. Peak smartphone. As with every technology, most major advances come early on, then it's slow, incremental tweaking. There has been no new feature in the last 3 years to tempt me to switch phones.

The one move left to expand the number of buyers would be to shift the whole pricing structure downwards.
 

Armenius

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What kind of DRAM exactly are they referring to? LPDDR, DDR, GDDR, is it the phone market, or the Laptop/Desktop market, or industrial/enterprise applications that is lacking? I am 10000% sure people want DDR4 sticks especially the B-Die Samsung Ram sticks as they tend to OC a bit better so maybe just maybe strop price fixing and allow reasonable prices and people will buy again like they used to also bring the price down on the SSDs there is zero reason for the price gouging, when you make shit in house everything is cheaper pass that along to the customer instead of trying to use Apple's tactics.
Probably soley in the cell phone market. We know that iPhone shipments are way down, it wouldn't be surprising to hear the same about other manufacturers. I'm sure consumer demand for DRAM is just a blip on their radar compared to their "real" customers in the tech industry.
 

Armenius

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yep. its really hard to to be too concerned when you are "only" making a $10 billion PROFIT every 3 months. Those poor people :rolleyes:
Trillion, not billion. Anyway, won is the South Korean currency and this is the conversion as of today:

₩10,000,000,000,000 = $8,938,850,000
 

katanaD

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Trillion, not billion. Anyway, won is the South Korean currency and this is the conversion as of today:

₩10,000,000,000,000 = $8,938,850,000

correct, but i, like the person i quoted, were talking US $, thats why the $ is used. to make it more comparable to a US audience
 

Grimlaking

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I suspect this is more a reflection of the market normalizing on memory purchases with the pull back from Bitcoin mining. This is going to effect multiple markets more broadly than we might thing. Who makes the memory chips that went on the video cards? Companies like Samsung. Who provided foundries for making the chips that went in the cards... companies like Samsung. This is a market normalization and impressive that Samsung was STILL 10 BILLION in the black after adjustments.
 
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Probably soley in the cell phone market. We know that iPhone shipments are way down, it wouldn't be surprising to hear the same about other manufacturers. I'm sure consumer demand for DRAM is just a blip on their radar compared to their "real" customers in the tech industry.
This is kind of my thinking early last year they said they were phasing production lines to LPDDR for phones as the market was more ripe causing price hikes on other forms of Dram, Yet the phone market is stifling . So basically they shifted production and got bit in the ass when the market fell off, well if there is a an excess of chips on the market you would think phones would drop in price a bit then to compensate, but somehow with the way the industry works I Imagine Phone manufacturers will just pocket the savings rather than passing them along to the customer.
 

Nanogrip

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Yeah screw you Samsung, I am happy with my 256MB RAM and with 13 tabs open on my browser.
 

Ski

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This isn't a phenomenon isolated with Nvidia, Samsung, Apple, nor LG. All sectors in the stock market in a bear market right now. Hell, even the weapon's manufacturers have taken a hit to about a third of their stock. There's a lot of fears and paranoia around the globe in regards to the United States and China's trade tension, not to mention China's housing bubble crisis is reaching 2008 levels and that could spell a problem for the west. And I know a lot of you guys would love more than to use this opportunity to profit or take advantage of the situation, but if another recession were to occur, it would be infinitely more devastating because we never really recovered from it in the first place.

I hope I'm wrong though, because if I'm right it's going to spell disaster for pensions, 401ks, IRA's, defaults on mortgages but also student loans that cannot be defaulted. And a lot of citizens are already pissed off as it is with the government shutdown; my state has the 2nd highest amount of federal workers and most of them are barely sustaining themselves from paycheck to paycheck as it is. Anecdotally speaking, a lot of my colleagues are starting to sound militant and that is troubling because I've never heard this kind of rhetoric before from them so it's definitely telling how intense this situation is getting.

But hey, if anyone knows an insider trading deal, don't hesitate to PM so we can make some monaaaaaay!
 
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