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Samsung profits fall as it gets squeezed at both ends of the market

Samsung

After blazing its way to the top of the smartphone pile — in sales at least — things have started to turn sour for Samsung. The South Korean electronics giant today announced a massive 49% drop in profits in its Q3 financial results.

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According to the company, a large portion of that drop is down to a knock in its smartphone sales thanks to increased competition as well as lower prices on older models.

Samsung reported quarterly net profit of (KRW) 4.22 trillion won (US$4-billion), or 8.9% of sales. Compare that with 8.24 trillion won (US$7.8-billion) it reported in the same period last year, and you can see that things aren’t looking great right now.

While mobile took the biggest hit, falling from 35.66 trillion won (US$33.87-billion) to 23.52 trillion won (US$22.3 billion) its other consumer electronics interests also took a fall, sinking 11% quarter on quarter. The margins there are however far smaller, meaning that the fall isn’t quite as bad.

That business also tends to be a bit more seasonal, so it woudln’t be surprising if it were to see an increase in the fourth quarter. That said, that seasonality should also provide a boost to its mobile sales, although it will do little to change the threat it faces from competitors.

The one bright point from the results came from Samsung’s semiconductor business, which saw a one percent increase in profitability growing to 9.89 trillion won (US$9.4-billion). The vast majority of that came from its memory business which saw a 15% increase from the previous quarter to 7.93 trillion won (US$7.53-billion).

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