As it announces its first-quarter earnings for 2019, Samsung Electronics highlighted the robust sales of its flagship smartphone lineup, the Samsung Galaxy S10.
While it did not provide any specific details regarding the number of units sold of its premium handset offering, the South Korean tech giant noted that despite the overall downward trend in the smartphone market, its mobile division experienced an increase in revenue on a quarter-to-quarter basis with the help of improved sales of the Galaxy S10.
According to Samsung Electronics, its IT and Mobile Communications Division, which includes the company’s smartphone unit, had a consolidated revenue of ₩27.2 trillion ($23.2 billion) and a profit of ₩2.27 trillion ($1.94 billion). While the division’s revenue increased from ₩23.32 trillion it registered in the fourth quarter of 2018, it represents a slight decrease from Samsung’s ₩28.54 trillion revenue from the same period last year.
This announcement by Samsung Electronics confirms recent reports and researches which highlight the impressive performance of the Galaxy S10 lineup. Compared to the Galaxy S9, Samsung managed to push more units of the Galaxy S10 in China, South Korea, and the United States.
The market research firm, Counterpoint Research, noted that the company’s decision to introduce the Galaxy S10e helped boost the sales of Samsung’s flagship smartphone lineup, with the research firm attributing the increase in the number of units sold to the cheapest model of the company’s premium handset series.
The success of the segmentation strategy likely promoted the company to use the same approach for the Galaxy Note lineup, with Samsung reportedly launching several models of the Galaxy Note series.
However, despite the robust sales of the Galaxy S10 lineup, the intense competition in the low-end and mid-range segments of the smartphone market negatively affected the profitability and the overall number of handsets sold by Samsung Electronics.
In its quest to compete better with Chinese tech firms, the South Korean smartphone manufacturer had to incur additional expenses like the addition of high-end features to its cheaper handset offerings. An additional cost that Samsung also had to shoulder is the more intensive marketing campaign related to the recent revamp of its handset lineup. These factors likely resulted in the 40-percent reduction in the division’s operating profit compared to the same period last year.
Nonetheless, Samsung is hopeful that its smartphone sales in the second half of 2019 will increase with the help of new products from the Galaxy A to the Galaxy Note lineups. The company is also banking on its portfolio of innovative smartphones, which include the Galaxy S10 5G, to further boost its sales in the second quarter of the year despite the continuing weak demand for smartphones in the next term.
On the other hand, Samsung Electronics faced problems in some of its major units, including semiconductors and displays. The South Korean tech firm’s semiconductor division is dealing with weak demand for NAND flash, DRAM, and image sensors, although the introduction of new flagship smartphones helped increase the demand for mobile DRAM. Samsung also saw an increase in demand for modems and chipsets.
Meanwhile, Samsung’s display business suffered a loss, and the company attributes its inability to make a profit due to overall slower demand for displays, a downward trend in prices for large screens, and intense competition with LCD panel makers for mobile screens. There is also a mixed result in the consumer electronics segment of the South Korean tech firm, which sales are negatively affected by the weak demand for television sets.
In terms of overall revenue, Samsung Electronics had a revenue of ₩52.39 trillion ($44.8 billion) in the first quarter of 2019, which is significantly lower than the ₩60.56 trillion revenue ($51.82 billion) in the same period last year. There is also a considerable drop in operating profit, with Samsung recording ₩6.23 trillion ($5.33 billion) in the first quarter of 2019 compared to ₩15.64 trillion ($13.38 billion) in the same period in 2018.