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Samsung Q419—No Recovery Yet
February 02, 2020
Samsung Electronics profit down 51% to KRW21.74 trillion won (US$18.53 billion) in 2019, down 5.5% Y/Y from KRW44.34 trillion, as its semiconductor sales dropped sharply. Total sales for 2019 came to KRW230.4 trillion, down 3.4% Y/Y from KRW243.77 trillion. Fourth-quarter 2019 revenues reached KRW59.88 trillion, down 3.4% Y/Y from KRW62 trillion. Fourth-quarter 2019 net profit was KRW5.23 trillion, down 38.2% Y/Y from KRW8.46 trillion. Semiconductor sales dropped 25% annually to KRW64.94 trillion in 2019. Within its semiconductor business, the memory segment saw revenues drop 31% to KRW50.22 trillion. For the memory segment, overall demand is expected to decline in first-quarter 2020 due to low seasonality, Samsung said, although the memory segment should increase due to: demand for datacenters; expanded sales of differentiated products, such as mobile LPDDR5 and high-density storage; enhanced technology leadership via process migration to 1znm DRAM and 6th-generation V-NAND. Samsung's mobile business registered 6% growth in 2019 sales to reach KRW102.33 trillion, but during fourth-quarter 2019, its mobile revenues dropped 14% to KRW24.05 trillion. In the Display business, OLEDs sales were in the mid-80% range in the fourth quarter of 2019 but mobile panel earnings decreased slightly Y/Y under weak demand for some premium product groups despite further diversification of our customer portfolio. The LCD panel business suffered another significant Y/Y reduction in earnings as persistent capacity expansions in the industry kept exacerbating the supply-demand imbalance. They anticipate increased adoption of OLED panels in 2020 as the 5G phone market expands LCD display’ earnings will remain weak due to a persistent supply glut and added costs from re-structuring to focus on QD-OLED Displays. For 2020, new entrants (BOE, Tianma, CSoT) are adding intensifying competition. But OLED shipments are expected to grow as the smartphone OEMs increasingly adopt OLED panels to address rising replacement demand which is focusing on 5G smartphones, which should boost utilization and shipments through an increased customer portfolio. Capex for OLEDs in 2019 declined compared to last year as investments in the A4 line were completed in 2018. Micro LED TV shipments will continue at a higher price range than what is currently the price range for consumer based premium TVs. But they think that even at that price range, there will be sufficient demand.
Fourth-quarter 2019 mobile sales fell sequentially due to dwindling new-product effects of a flagship model. But sales forecast looks brighter on a better product mix from launches of new flagship models and foldable devices in first-quarter 2020. For 2020, demand for 5G phones is expected to climb, while spec competition is expected to intensify, said Samsung, adding it will strive to improve earnings by expanding sales of premium products, strengthening its 5G lineup, and adding a new foldable design. They expect to improve earnings in 2020 by expanding sales of premium models, including 5G devices as well as new foldable designs, while strengthening the mid-range to low-end lineups. In a question about the Indian market, where Samsung dropped from #2 to #3 in Q419, they said “the Indian smartphone market competition is becoming more fierce. We are planning to respond actively to the changing market environment by launching new models that reflect the needs of Indian consumers, also obtaining the price competitiveness that suits the market situation, and also further strengthening our collaboration with a local service as well as the distribution. Especially in order to respond to the increasing share of the online distribution channel, last year, we newly introduced the M series. And this has actually resulted in achievements, for example, in increasing the share of online sales versus the previous year. We will build on this momentum to continue to make our products more competitive and also improve our sales competitiveness through the online channel.”
February 02, 2020
Samsung Electronics profit down 51% to KRW21.74 trillion won (US$18.53 billion) in 2019, down 5.5% Y/Y from KRW44.34 trillion, as its semiconductor sales dropped sharply. Total sales for 2019 came to KRW230.4 trillion, down 3.4% Y/Y from KRW243.77 trillion. Fourth-quarter 2019 revenues reached KRW59.88 trillion, down 3.4% Y/Y from KRW62 trillion. Fourth-quarter 2019 net profit was KRW5.23 trillion, down 38.2% Y/Y from KRW8.46 trillion. Semiconductor sales dropped 25% annually to KRW64.94 trillion in 2019. Within its semiconductor business, the memory segment saw revenues drop 31% to KRW50.22 trillion. For the memory segment, overall demand is expected to decline in first-quarter 2020 due to low seasonality, Samsung said, although the memory segment should increase due to: demand for datacenters; expanded sales of differentiated products, such as mobile LPDDR5 and high-density storage; enhanced technology leadership via process migration to 1znm DRAM and 6th-generation V-NAND. Samsung's mobile business registered 6% growth in 2019 sales to reach KRW102.33 trillion, but during fourth-quarter 2019, its mobile revenues dropped 14% to KRW24.05 trillion. In the Display business, OLEDs sales were in the mid-80% range in the fourth quarter of 2019 but mobile panel earnings decreased slightly Y/Y under weak demand for some premium product groups despite further diversification of our customer portfolio. The LCD panel business suffered another significant Y/Y reduction in earnings as persistent capacity expansions in the industry kept exacerbating the supply-demand imbalance. They anticipate increased adoption of OLED panels in 2020 as the 5G phone market expands LCD display’ earnings will remain weak due to a persistent supply glut and added costs from re-structuring to focus on QD-OLED Displays. For 2020, new entrants (BOE, Tianma, CSoT) are adding intensifying competition. But OLED shipments are expected to grow as the smartphone OEMs increasingly adopt OLED panels to address rising replacement demand which is focusing on 5G smartphones, which should boost utilization and shipments through an increased customer portfolio. Capex for OLEDs in 2019 declined compared to last year as investments in the A4 line were completed in 2018. Micro LED TV shipments will continue at a higher price range than what is currently the price range for consumer based premium TVs. But they think that even at that price range, there will be sufficient demand.
Fourth-quarter 2019 mobile sales fell sequentially due to dwindling new-product effects of a flagship model. But sales forecast looks brighter on a better product mix from launches of new flagship models and foldable devices in first-quarter 2020. For 2020, demand for 5G phones is expected to climb, while spec competition is expected to intensify, said Samsung, adding it will strive to improve earnings by expanding sales of premium products, strengthening its 5G lineup, and adding a new foldable design. They expect to improve earnings in 2020 by expanding sales of premium models, including 5G devices as well as new foldable designs, while strengthening the mid-range to low-end lineups. In a question about the Indian market, where Samsung dropped from #2 to #3 in Q419, they said “the Indian smartphone market competition is becoming more fierce. We are planning to respond actively to the changing market environment by launching new models that reflect the needs of Indian consumers, also obtaining the price competitiveness that suits the market situation, and also further strengthening our collaboration with a local service as well as the distribution. Especially in order to respond to the increasing share of the online distribution channel, last year, we newly introduced the M series. And this has actually resulted in achievements, for example, in increasing the share of online sales versus the previous year. We will build on this momentum to continue to make our products more competitive and also improve our sales competitiveness through the online channel.”
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