Samsung Profit Plummets 55 Percent As Memory Chip Sales Falter

Samsung Electronics is a name that many most closely associate with smartphones like the Galaxy Note 10 that has leaked multiple times and the current Galaxy S10e, S10, and S10+. However, Samsung also sells lots of hardware components to device makers, particularly memory chips. Much of the profits the company earns are tied to memory chip sales, and those profits have dropped more than 50%.

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Memory chip prices have plummeted recently and have taken Samsung's profits along for the ride. Samsung Electronics recently reported its profits for the quarter that ended in June. Samsung says that operating profits from the quarter were 6.6 trillion won, or about $5.6 billion. That is a decline of 55.61% compared to the same quarter in 2018. Consolidated revenue was 56.13 trillion won.

Samsung has said in a release that "weakness and price declines" in the memory chip market have continued as inventory adjustments by major data center customers in the previous quarters continued. Samsung did note that there was a limited demand in recovery during the quarter. The upside for Samsung is that the numbers it reported were slightly better than what it had predicted previously, but Samsung shares still declined 2.58% in morning trading.

Samsung's semiconductor business posted consolidated revenue of 16.09 trillion won, and an operating profit of 3.4 trillion won for the quarter. That was down almost 71% from the same quarter a year ago. Samsung says that it expects to see demand grow in the second half of the year, despite volatility in the overall industry. The quarter marks the second straight where Samsung said its operating profit more than halved compared to the previous year. Analysts are expecting the market to recover in 2020.