Samsung’s smartphone business is definitely the most public example of its growth and success over the past 10 years, but it’s certainly not the most profitable. That falls to the company’s memory division, which supplies DRAM modules for most smartphone makers, including Apple.
Well, as we know, Apple’s been experiencing some struggles of its own in recent months, warning of an multi-billion-dollar revenue shortfall due to slowing iPhone sales. Samsung is Apple’s biggest provider of memory chips, and thanks to languidness in that particular market — the economic slowdown in China is affecting everything, including how much companies are willing to pay for DRAM — its bottom line is being affected mightily.
According to Bloomberg, Samsung is expected to announce fourth-quarter earnings much weaker than analysts initially predicted, missing profit targets for the first time in years. Things should return to relative normalcy in the second half of 2019, but in the meantime, it’s looking to its phone business to give its bottom line a boost in the meantime. That responsibility falls to the Galaxy S10 series, which is expected to debut at Mobile World Congress at the end of February, and the upcoming foldable Galaxy X (or whatever it ends up being called), which should debut in the first half of 2019.
Then there’s the 5G question — Samsung has pre-announced that it’s bringing 5G phones to every major U.S. carrier in 2019. While total numbers are likely to be low, the average cost of a 5G phone is expected to be higher than the average flagship Android handset, which in this environment could go as high as $1500. Whether Samsung’s first 5G devices will be variants of the S10 or something else altogether remains to be seen, though.
It’s unlikely that Samsung will be able to make back the shortfall in its memory division through smartphones alone, despite a year that’s expected to see huge innovation in, and increased demand for, the smartphone ecosystem. But given that even being heralded as some of the best phones of 2018, and Samsung’s best ever, the S9, S9+ and Note 9 didn’t sell in numbers that Samsung was happy with, 2019 will likely be a growth year for the South Korean giant in general.
January 7, 2019 at 03:46PM