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Samsung expects another big slump in profits

Despite the undeniable success of the Galaxy S10 flagship smartphone series, it seems as Samsung isn’t out of the woods yet and that its profits are still dropping.

Samsung tech giant said Friday that it expects to make an operating profit of 6.6 trillion Korean won ($5.6 billion) for the quarter ended June, down from about 14.9 trillion Korean won ($12.7 billion) for the same period a year ago.

This would be Samsung’s lowest profit since Q3 2016, when the company was hit by the Galaxy Note 7 debacle. Samsung doesn’t provide full explanations along with its earnings guidance, but analysts suggest the Huawei crackdown could have had a significant impact on Samsung’s critical chip business. On the other hand, it’s also likely to help Samsung’s smartphone sales in certain markets.

The earnings forecast was better than analysts’ downbeat expectations, thanks to what Samsung called a “one-time gain related to the display business.” The company supplies display screens to other smartphone makers like Apple.

Samsung is the world’s biggest seller of smartphones. It also has a huge business making key components for rival device manufacturers and is ramping up its 5G network equipment business.

That makes Samsung a potential winner and loser from the current troubles facing Huawei, the world’s largest telecommunications equipment maker and No. 2 smartphone seller.

Samsung’s smartphone shipments are already seeing “positive impact from the US sanctions on Huawei” and he expects the company’s smartphone and network equipment businesses will further benefit from Huawei’s woes in the second half of this year.

Samsung is expected to report full earnings at the end of the month.

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