Samsung’s Q2 Profits Drop by 56% from Last Year, Huawei Crackdown Might Be Why

Samsung’s Q2 earnings report is about to arrive, but before it could — the tech giant decided to make an announcement that would prepare its investors for the result. According to the new announcement, the situation is not as well as many might have expected. In fact, Samsung admitted that its profits are down by 56% when compared to Q2 2018.

This might sound bad at first, but this still means that the South Korea-based firm made around 6.5 trillion won, or close to $5.6 billion. However, its revenue is predicted to hit around 56 trillion won ($47.9 billion), which is around 4% slide.

As impressive as this might be, this is still quite low for the figures Samsung is used to seeing. In fact, this is the lowest that the company has earned since the third quarter of 2016. Even back then, such figures were not a normal earning, but a result of a Galaxy Note 7 issues, which the company had to recall.

At this time, the company did not offer justifications, commentary, nor did it try to explain the situation in any other way. However, according to analysts, the issue might be a result of Huawei’s problem with the government of the US. It is believed that the ban on Huawei products may have impacted the company’s chip business.

Of course, this does not necessarily mean bad news for Samsung — if Huawei sales fall as a result of the war with the US, Samsung might benefit greatly. Even so, negative consequences are quite obvious in the short term.

Things could have gone a lot worse for Samsung

Even so, there are many who believe that Samsung’s 56% slide in profits might not be that bad, or at least — it is not as bad as it could have been. According to analysts, Samsung also received a massive one-time payment from Apple, which was at around $684 million.

Apple’s iPhones use OLED screens, which Samsung itself provides, and Apple did not have a lot of success when it comes to reaching its agreed sales target. This is not good news for either of the firms, but Samsung seems to be holding its own for the time being.

In fact, the company said that it expects both, chip sales and smartphone sales, to grow again as the year enters its second half. Of course, this prediction was likely fueled by high expectations of its Note 10. While there is no guarantee that Samsung is wrong about its predictions, the situation does not seem especially bright at the moment.

Once again — it could have been worse, and positive predictions are something that Samsung desperately needs right now. At this point, everyone will simply have to wait for the Q3 report to arrive and confirm or deny the company’s expectations.

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Ali Raza

Ali Raza

A journalist, with experience in web journalism and marketing. Ali holds a master degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.
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