Samsung Weary on Smartphone Recovery in H2

Samsung forecasts double-digit profitability in its mobile division on a full-year basis. The South Korean tech giant expects to achieve that by enhancing operational efficiencies, with revenue also expected to rebound after dropping in Q2.

While Samsung expects the smartphone market to return to year-on-year growth in H2 led by the premium tier, VP of the Mobile eXperience (MX) division Daniel Araujo said on its earnings call there is potential for additional cuts, citing global economic risks. Samsung tipped the tablet market to stay mostly flat, with demand increasing in the high-end segment.

MX and Networks sales dropped 13% year-on-year in Q2 to KRW25.6 trillion ($20 billion). Revenue from network equipment fell in major markets including North America and Japan. Operating profit fell 13.8% to KRW4 trillion. Smartphone shipments declined 15.5% to 53 million units, with the ASP falling 4.3% to $269. Tablet shipments dropped 14.3% to 6 million units. Araujo said sales decreased due to premium smartphones accounting for a lower percentage of shipments.

Net profit fell 86% to KRW1.6 trillion and revenue 22% to KRW60 trillion, attributed to weak smartphone demand. Samsung cited global economic factors including a delay in recovery of the semiconductor market caused by inflation, along with continued inventory adjustments by its customers. It plans to continue to reduce memory chip production despite forecasting a rebound in sales in H2.