Samsung capped off a rough month — wherein its first foldable smartphone was delayed — with its weakest quarterly profit in more than two years. While chipset and display sales plunged during the first quarter of 2019, Samsung said its networking business was a relative bright spot due to the launch of 5G services in Korea.
Sales within the division that includes Samsung’s networking business and smartphones was down 4.4% year over year to $23.3 billion, and operating profit was down 39.8% during the same period hitting $1.95 billion.
“In the network business, earnings grew due to accelerated commercialization of 5G network in Korea,” Robert Yi, Samsung’s head of investor relations, said during its first quarter earnings call with investors. “The network business will keep growing its presence in global 5G and LTE network installations.”
Samsung anticipates demand for its equipment to grow in the second half of the year as LTE networks expand globally and as more operators purchase 5G equipment in South Korea and the United States.
“For the network business, we will maintain our leadership role by strengthening our business foundation through continuing to expand LTE networks into the overseas market and 5G acumen for initial markets, such as South Korea and the United States,” JongMin Lee, vice president of Samsung’s mobile communications business, said during the call.
Executives said the company is also focusing more heavily on network services, which aid in the deployment and optimization of radio access networks and the network core. Operators in Korea, the United States, Japan, India, and elsewhere are working with Samsung on that effort, according to the company.
“Demand for 5G chipsets solutions is also expected to rise on the back of increasing sales of the 5G enabled smartphone,” Ben Hur, senior vice president of Samsung’s semiconductor business, said during the earnings call. “In this quarter we will seek to secure new customers in the [United States] and China for 5G chipset solutions and commercialize them in a timely manner. We [will] also concentrate on developing the next 5G chipset solution by integrating an application processor and 5G modem into one single chip.”
While Samsung expects demand for memory chipsets to improve in the second half of the year, it’s also aiming to “secure solid earnings via commercialization of 5G” in the current quarter. Later this year, it hopes to build a solid foundation for growth by “expanding supply in the initial markets” for 5G.
Total net profit for Samsung slid 57% year over year to $4.3 billion and revenues dipped 13.5% to $44.9 billion.