Samsung Pushing To Improve Its TV And Smartphone Earnings
With its chip business in decline, Samsung is reportedly looking to improve revenue from its smartphone and TV businesses. According to Korean media, the company's control tower has ordered the two business units to find ways to generate more cash in the coming months. An early launch of the Galaxy Z Fold 5 and Galaxy Z Flip 5 could result.
Last quarter, Samsung posted its lowest quarterly profit in years. The Korean giant has bankrolled KRW 640 billion (about $483 million) in the first three months of 2023. In comparison, it banked KRW 14.12 trillion (over $10 billion) in the same period last year. Recent figures indicate a 96% year-on-year drop in profits, which is not good for any global company.
This sharp decline is due to the slowdown in the semiconductor industry. Chip prices have dropped significantly over the past few months. And since Samsung typically makes more than half of its quarterly profits from chip sales, it can't avoid this downturn. To put things into perspective, the Korean giant generated 8.45 trillion in revenue from chips in the first quarter of 2022 (about 60% of total profit in that quarter). But in the first quarter of 2023, it lost KRW 4.58 trillion.
This is the company's first loss in the chip business in 14 years. Worse, the outlook for the coming months is not good. Samsung doesn't see its semiconductor division significantly reversing that deficit anytime soon. Thus, he wants other business units to contribute more to their profits. After all, the Korean giant is looking at its TV and smartphone business units.
According to The Elects, Samsung's business support task force has directed the organization's control tower to come up with strategies to generate additional revenue for these units in the coming quarter. In response to this call, it is said that the smartphones Galaxy Z Fold 5 and Galaxy Z Flip 5 are planning to launch 2-3 weeks earlier than usual. The start of the pair at the end of July allowed to improve the results in the third quarter (from July to September).
But it all looks bleak for Samsung's TV business. In the first quarter, it made lower profits than its home country and rival LG, and in the second quarter it will not have the tools ready to boost business growth. To make matters worse, consumer spending on electronics is weak, but LCD screen prices are rising. Whether Samsung can improve its earnings in the next quarter remains to be seen.
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