Sorry, Samsung. Seems nobody is immune to peak smartphone

Chaebol warns operating profit to fall 29%

Smartphones are experiencing their first ever recession, and Samsung is feeling the pain too.

The electronics giant lowered its outlook for its fourth quarter of fiscal 2018 yesterday, citing "mounting macro uncertainties". It warned that revenue would be down 11 per cent and operating profit down 29 per cent year on year. Although with net income of $9.7bn, that's the sort of pain many others could live with.

As we pointed out this week, Samsung's direct exposure to smartphones is lower than Apple's – it is more diversified. But it's the indirect exposure that will concern execs as Samsung provides the displays and memory chips for lots of other people's phones, including Apple's iPhone. If the market is shrinking, that means fewer sales and falling prices. The company did not break out expectations by division, but said it expects demand for components to rebound in the second half of 2019.

Samsung's share of profits in the smartphone market peaked in 2013... but every other Android phone maker has been losing money.

As one of a small handful of chip designers that owns its fabrication plants, Samsung is seeking to license its bleeding-edge Exynos silicon more widely. It's also seeking to play a larger role in providing network operators with 5G gear. ®


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