Sunday , November 1 2020

Samsung hopes 5G will save its slumping profits this year

Samsung Electronics just released fourth-quarter earnings that told much the same story as the rest of 2019. Revenue was more or less flat year-on-year — up 1 percent to 59.9 trillion won ($50.7 billion) — while operating profit slid 34 percent to 7.1 trillion won ($6 billion).

The primary reason for the decline remains the fall in prices of memory chips, Samsung’s biggest profit driver in recent years. The display panel business also saw profits fall year-on-year due to weak demand. The mobile division, on the other hand, did better than a year ago, with Samsung calling out “solid” flagship sales and the profitability of phones like the Galaxy A series.

Samsung is hoping that the wider adoption of 5G in 2020 will improve its numbers more or less across the board. The 5G upgrade cycle is likely to help the mobile division, of course, but Samsung notes it should be able to increase memory sales to handset manufacturers and data center companies. The company also plans to develop integrated 5G chips for mass-market smartphones, and expects demand for its OLED displays and high-resolution phone camera sensors to increase.

Samsung cautions, however, that the “actual pace of 5G expansion … remains to be seen,” which probably isn’t the last time we’ll hear that in a tech company’s forecasts this year. How that shakes out in practice is going to have a major effect on Samsung in particular over the next year, since so many areas of its business are involved directly or indirectly.

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