9 ms·

Samsung warns profit to fall 60%

199 points by Ultramanoid 8y ago

tyingq 8y ago
Moore is less, I guess? People holding on to older phones longer.
- darpa_escapee 8y ago
  Or buying cheaper phones. A Xaomi phone can suit a user's needs just as well as a $999 Samsung S10+.
- dragosmocrii 8y ago
  Why should I upgrade my Huawei P9 I got in 2016, when it works perfectly fine* and has the adequate power to run everything smoothly. * I did change the battery twice though. Too bad it's not as easy as taking the back cover as on a Nexus One...
  - collyw 8y ago
    A lot of people get phones as part of a contract (here in Europe at least), and that's usually a year and a half or two years. After that you might as well take the phone upgrade.
    - kurtisc 8y ago
      Keeping the phone and going SIM-only is much cheaper
      - collyw 8y ago
        Sue that's why I do but I think I am in a minority with that.
    - pjmlp 8y ago
      Except that most Europeans actually go for pre-paid phones, unless they are really into iPhones and Samsung S devices.
      - collyw 8y ago
        Have you got any stats to back that claim up? When I tried to get internet here in Spain a few years ago, I asked Vodafone how much it cost. 40 Euros per month (then add on tax). I asked how much it was for a bundle with internet a phone and a mobile contract. Same price. I do see younger people with a lot of lat generation iPhones probably as handed downs from people on contracts.
        pjmlp 8y ago
        As I mentioned "....unless they are really into iPhones and Samsung S devices.", which are way out of budget as pre-pay. As for stats, I could only get those from 2015, it was 50% across Europe, 77% worldwide. https://www.globalrewardsolutions.com/wp-content/uploads/GRS-Mobile-Top-up_Wireless-Market-Statistics-2015.pdf https://www.globalrewardsolutions.com/wp-content/uploads/GRS... Although I did find a couple that show Spain only has around 20% prepaid, which was quite surprising to me.
  - tjoff 8y ago
    Well, because of the hassle the answer is that most would just get a new phone.
forkLding 8y ago
Signals to the end of an era, smartphones have matured and are becoming ubiquitous like laptops. Moreover, the most profitable smartphones belong to Apple which held 86% of smartphone profits generated in the industry in 2018. Samsung was competing more in the mid to affordable segments so it was bound to start losing once others started catching up, especially since its Chinese competitors are basically giving up profits for growth in the affordable to medium segments. https://appleinsider.com/articles/18/04/17/apple-grabs-86-of-smartphone-profits-globally-iphone-x-alone-seizes-35 https://appleinsider.com/articles/18/04/17/apple-grabs-86-of...
- zaphirplane 8y ago
  > Samsung was competing more in the mid to affordable I assumed Samsung’s android phones were the top of the range. Who do you think is the high end android phone brand
  - forkLding 8y ago
    Just comparing smartphones in general, not really Android vs IOS. Samsung was probably the top-range Android phones in terms of pricing.
    - zaphirplane 8y ago
      That the best android phone is at best a midrange smart phone. Is an interesting and very unlikely to be a broadly shared opinion
  - zanny 8y ago
    They make high end phones, but their sales volume doesn't make up for the margins. In terms of manufactured phone volume, the Galaxy line makes up a tiny fraction of their total sales. I feel like the vast majority of the Android ecosystem foot gunned itself pushing its way out of reasonably priced device segments. There really are no modern equivalents to the Moto G or Nexus 5 or even early One Plus phones in the $150-$350 range. Its garbage up through $200, then a giant gap to $1000 phones. Especially in the tablet segment. I can get why Google didn't want to try to single-handedly prop up the form factor with first party devices, but the last good (and reasonably priced) Android tablets remain the second generation Nexus 7 and Nvidia Shield from half a decade ago.
axaxs 8y ago
Samsung's problems are just beginning. They're getting destroyed on every front, and basically all comes from China. On the phone front, they were used to selling phones at premium pricing only relying on their brand name. You don't have to look past Nokia or Blackberry to see how that will end. They're not really innovative, and while their devices are generally quality, they've pushed the price point too high. Xiaomi does 90 percent of it for 30 percent of the price. Huawei does 200 percent for about the same price. On the chip front, TSMC has been outpacing them for years, and is getting all the contracts. The only thing I can think of that Samsung does better than anyone else is OLED, and others are catching up very quickly. I think Samsung will join the ranks of HTC and LG as also rans in short time...
- sanxiyn 8y ago
  Samsung is undisputed leader in DRAM and NAND.
  - axaxs 8y ago
    I appreciate the insight. I don't know anything about that business, and also realize that Samsung as a whole is a huge conglomerate with many things I don't track. Being chip based, I'm assuming they have increasing competition from China though, no?
    - sanxiyn 8y ago
      No. There actually has been a good news from China on DRAM recently. Fujian Jinhua, the leading Chinese DRAM competitor, is rumored to be exiting the business.
      - ksec 8y ago
        It is more of a political move to smooth out the Damage about Fujian Jinhua stealing IPs from Micron more than anything else.
        8y ago
sanxiyn 8y ago
Comments here are out of their mind. Samsung's smartphone business hasn't been a profit center for quite some time. Majority of profit came from DRAM and NAND, and profit fall is directly attributable to recent price crash of both.
- onlyrealcuzzo 8y ago
  What caused a price crash of both DRAM and NAND??
  - sanxiyn 8y ago
    Oversupply.
  - a_bonobo 8y ago
    There is more background in other articles on Samsung's prediction: >Samsung said it received fewer orders from cloud service providers, such as Amazon, as well as from handset makers, such as Apple, which has recently seen a slowdown of its own smartphone sales. This low demand in the cloud services and smartphone markets for both DRAM and NAND flash chips have pushed the prices of these chips down. >According to Bloomberg, data centers are still going through their unused memory chips right now, Apple has cut its forecasts for iPhone sales and China’s economy, which is Samsung’s largest market for embedded components, has also slowed down this year. >According to IHS Markit, a research firm, the market for DRAM is set to reach $77 billion in sales this year, which is a drop of 22% compared to last year. In this last quarter, DRAM prices fell over 30% (38% for server DRAM), which is the “sharpest decline since 2011," according to TrendForce. https://www.tomshardware.com/news/samsung-q1-2019-earnings-profits-down,38999.html https://www.tomshardware.com/news/samsung-q1-2019-earnings-p...
    - ksec 8y ago
      I have never trusted this Datacentre narratives because it doesn't make sense. On one hand you have you Intel saying they can not supply enough CPU because of high demands, on the other hand Component manufacture are blaming the low Supply in the channel for their lower than expected sales. All while AMD is taking server and desktop side market shares, no matter how small the percentage that is. I think it basically boils down to few things. 1. Surprise Drop of Smartphone Unit Sold, we saw the first YoY decline in total Smartphone Unit shipment. ( Unit, not revenue ). Out of a 1.3B Smartphone market, even a 5% drop is a huge volume to fill. 2. Better than expected yield of 3D NAND. Which means you actually have an increase in output. And it just happen all three, Samsung, SK Hynix and Micron were able to yield better at the same time. To be fair they have been very conservatives with their estimate. 3. More Chinese DRAM and NAND are being used in the Domestic market. Which is unofficially required for selling phones in China. All these along with the improved efficiency of DRAM and NAND Fabs for trying to fill orders during 2017 and 2018 without building new Fabs. Meant the DRAM / NAND are hit with a perfect storm.
skilled 8y ago
Been using a Huawei 3i phone for more than a month now. I literally could not tell if this was Huawei or Samsung if I was given this phone without prior knowledge. Although, there are rumors that Huawei are working on their own OS. And it would be interesting to see whether they would also introduce an OS for their laptop series.
- baybal2 8y ago
  "own OS" mentioned there is just another linux distro
- prolikewhoa 8y ago
  I've been using a $169 Android One Xiaomi and the only difference I can tell between my original Pixel 1 is with the Camera and lack of USB-C. Xiaomi gets 3x the battery life. I have a Sony A6500 that I use for photos and just WiFi transfer them to the Xiaomi seamlessly. No reason for a really cutting edge phone anymore unless you use it primarily for gaming or absolutely need a top tier camera?
baybal2 8y ago
It's not clear what they are talking about, Samsung Electronics, Samsung Electro Mechanics (their components business,) or the whole Samsung Group.
- sanxiyn 8y ago
  It's about Samsung Electronics. Samsung Electronics (roughly) has telecommunication division doing smartphone business and component division doing DRAM and NAND. Samsung Electro-Mechanics does semiconductor packaging, not semiconductor itself.
unstatusthequo 8y ago
Winter is coming

199 points by Ultramanoid 8y ago

tyingq 8y ago

Moore is less, I guess? People holding on to older phones longer.

darpa_escapee 8y ago
Or buying cheaper phones. A Xaomi phone can suit a user's needs just as well as a $999 Samsung S10+.
dragosmocrii 8y ago
Why should I upgrade my Huawei P9 I got in 2016, when it works perfectly fine* and has the adequate power to run everything smoothly. * I did change the battery twice though. Too bad it's not as easy as taking the back cover as on a Nexus One...
- collyw 8y ago
  A lot of people get phones as part of a contract (here in Europe at least), and that's usually a year and a half or two years. After that you might as well take the phone upgrade.
  - kurtisc 8y ago
    Keeping the phone and going SIM-only is much cheaper
    - collyw 8y ago
      Sue that's why I do but I think I am in a minority with that.
  - pjmlp 8y ago
    Except that most Europeans actually go for pre-paid phones, unless they are really into iPhones and Samsung S devices.
    - collyw 8y ago
      Have you got any stats to back that claim up? When I tried to get internet here in Spain a few years ago, I asked Vodafone how much it cost. 40 Euros per month (then add on tax). I asked how much it was for a bundle with internet a phone and a mobile contract. Same price. I do see younger people with a lot of lat generation iPhones probably as handed downs from people on contracts.
      - pjmlp 8y ago
        As I mentioned "....unless they are really into iPhones and Samsung S devices.", which are way out of budget as pre-pay. As for stats, I could only get those from 2015, it was 50% across Europe, 77% worldwide. https://www.globalrewardsolutions.com/wp-content/uploads/GRS-Mobile-Top-up_Wireless-Market-Statistics-2015.pdf https://www.globalrewardsolutions.com/wp-content/uploads/GRS... Although I did find a couple that show Spain only has around 20% prepaid, which was quite surprising to me.
- tjoff 8y ago
  Well, because of the hassle the answer is that most would just get a new phone.

forkLding 8y ago

Signals to the end of an era, smartphones have matured and are becoming ubiquitous like laptops. Moreover, the most profitable smartphones belong to Apple which held 86% of smartphone profits generated in the industry in 2018. Samsung was competing more in the mid to affordable segments so it was bound to start losing once others started catching up, especially since its Chinese competitors are basically giving up profits for growth in the affordable to medium segments. https://appleinsider.com/articles/18/04/17/apple-grabs-86-of-smartphone-profits-globally-iphone-x-alone-seizes-35 https://appleinsider.com/articles/18/04/17/apple-grabs-86-of...

zaphirplane 8y ago
> Samsung was competing more in the mid to affordable I assumed Samsung’s android phones were the top of the range. Who do you think is the high end android phone brand
- forkLding 8y ago
  Just comparing smartphones in general, not really Android vs IOS. Samsung was probably the top-range Android phones in terms of pricing.
  - zaphirplane 8y ago
    That the best android phone is at best a midrange smart phone. Is an interesting and very unlikely to be a broadly shared opinion
- zanny 8y ago
  They make high end phones, but their sales volume doesn't make up for the margins. In terms of manufactured phone volume, the Galaxy line makes up a tiny fraction of their total sales. I feel like the vast majority of the Android ecosystem foot gunned itself pushing its way out of reasonably priced device segments. There really are no modern equivalents to the Moto G or Nexus 5 or even early One Plus phones in the $150-$350 range. Its garbage up through $200, then a giant gap to $1000 phones. Especially in the tablet segment. I can get why Google didn't want to try to single-handedly prop up the form factor with first party devices, but the last good (and reasonably priced) Android tablets remain the second generation Nexus 7 and Nvidia Shield from half a decade ago.

axaxs 8y ago

Samsung's problems are just beginning. They're getting destroyed on every front, and basically all comes from China. On the phone front, they were used to selling phones at premium pricing only relying on their brand name. You don't have to look past Nokia or Blackberry to see how that will end. They're not really innovative, and while their devices are generally quality, they've pushed the price point too high. Xiaomi does 90 percent of it for 30 percent of the price. Huawei does 200 percent for about the same price. On the chip front, TSMC has been outpacing them for years, and is getting all the contracts. The only thing I can think of that Samsung does better than anyone else is OLED, and others are catching up very quickly. I think Samsung will join the ranks of HTC and LG as also rans in short time...

sanxiyn 8y ago
Samsung is undisputed leader in DRAM and NAND.
- axaxs 8y ago
  I appreciate the insight. I don't know anything about that business, and also realize that Samsung as a whole is a huge conglomerate with many things I don't track. Being chip based, I'm assuming they have increasing competition from China though, no?
  - sanxiyn 8y ago
    No. There actually has been a good news from China on DRAM recently. Fujian Jinhua, the leading Chinese DRAM competitor, is rumored to be exiting the business.
    - ksec 8y ago
      It is more of a political move to smooth out the Damage about Fujian Jinhua stealing IPs from Micron more than anything else.
      - 8y ago

sanxiyn 8y ago

Comments here are out of their mind. Samsung's smartphone business hasn't been a profit center for quite some time. Majority of profit came from DRAM and NAND, and profit fall is directly attributable to recent price crash of both.

onlyrealcuzzo 8y ago
What caused a price crash of both DRAM and NAND??
- sanxiyn 8y ago
  Oversupply.
- a_bonobo 8y ago
  There is more background in other articles on Samsung's prediction: >Samsung said it received fewer orders from cloud service providers, such as Amazon, as well as from handset makers, such as Apple, which has recently seen a slowdown of its own smartphone sales. This low demand in the cloud services and smartphone markets for both DRAM and NAND flash chips have pushed the prices of these chips down. >According to Bloomberg, data centers are still going through their unused memory chips right now, Apple has cut its forecasts for iPhone sales and China’s economy, which is Samsung’s largest market for embedded components, has also slowed down this year. >According to IHS Markit, a research firm, the market for DRAM is set to reach $77 billion in sales this year, which is a drop of 22% compared to last year. In this last quarter, DRAM prices fell over 30% (38% for server DRAM), which is the “sharpest decline since 2011," according to TrendForce. https://www.tomshardware.com/news/samsung-q1-2019-earnings-profits-down,38999.html https://www.tomshardware.com/news/samsung-q1-2019-earnings-p...
  - ksec 8y ago
    I have never trusted this Datacentre narratives because it doesn't make sense. On one hand you have you Intel saying they can not supply enough CPU because of high demands, on the other hand Component manufacture are blaming the low Supply in the channel for their lower than expected sales. All while AMD is taking server and desktop side market shares, no matter how small the percentage that is. I think it basically boils down to few things. 1. Surprise Drop of Smartphone Unit Sold, we saw the first YoY decline in total Smartphone Unit shipment. ( Unit, not revenue ). Out of a 1.3B Smartphone market, even a 5% drop is a huge volume to fill. 2. Better than expected yield of 3D NAND. Which means you actually have an increase in output. And it just happen all three, Samsung, SK Hynix and Micron were able to yield better at the same time. To be fair they have been very conservatives with their estimate. 3. More Chinese DRAM and NAND are being used in the Domestic market. Which is unofficially required for selling phones in China. All these along with the improved efficiency of DRAM and NAND Fabs for trying to fill orders during 2017 and 2018 without building new Fabs. Meant the DRAM / NAND are hit with a perfect storm.

skilled 8y ago

Been using a Huawei 3i phone for more than a month now. I literally could not tell if this was Huawei or Samsung if I was given this phone without prior knowledge. Although, there are rumors that Huawei are working on their own OS. And it would be interesting to see whether they would also introduce an OS for their laptop series.

baybal2 8y ago
"own OS" mentioned there is just another linux distro
prolikewhoa 8y ago
I've been using a $169 Android One Xiaomi and the only difference I can tell between my original Pixel 1 is with the Camera and lack of USB-C. Xiaomi gets 3x the battery life. I have a Sony A6500 that I use for photos and just WiFi transfer them to the Xiaomi seamlessly. No reason for a really cutting edge phone anymore unless you use it primarily for gaming or absolutely need a top tier camera?

baybal2 8y ago

It's not clear what they are talking about, Samsung Electronics, Samsung Electro Mechanics (their components business,) or the whole Samsung Group.

sanxiyn 8y ago
It's about Samsung Electronics. Samsung Electronics (roughly) has telecommunication division doing smartphone business and component division doing DRAM and NAND. Samsung Electro-Mechanics does semiconductor packaging, not semiconductor itself.

unstatusthequo 8y ago

Winter is coming