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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,

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.
    - sanxiyn 8y ago
      I heard from grapevine that cloud vendors accumulated DRAM stockpile. That's why CPU demand is high but DRAM demand is low.
    - lrem 8y ago
      These are not at odds. You want your machines to be uniform. If Intel calls you saying they'll deliver only two out of the ten thousand Xeon 1234-5 units you ordered this quarter, you call Samsung and cancel 80% of the order there.
- blihp 8y ago
  At least part of the DRAM issue is related to Intel's CPU supply issues being a drag on new PC sales.[1] But overall for DRAM and NAND, it's probably a case of market saturation in many sectors. [1] As well as AMD has been doing with Ryzen, most large computer purchasers are still Intel buyers and are slow to change.
- iClaudiusX 8y ago
  All the major SSD NAND flash producers finally hit volume production of 3D TLC NAND at roughly the same time last year which sent prices falling precipitously. I'm not aware of a similar pattern in DRAM, which if anything has been suspiciously high for a while to the point that many assume price fixing was to blame as has happened in the past.
  - sanxiyn 8y ago
    I think people attributed DRAM demand to cloud computing hyperscaling. Demand was higher than actual demand, because all of Amazon, Microsoft, Google purchased DRAM assuming their market share would increase. Predicted market share probably totaled well over 100%.
caprese 8y ago
> Majority of profit came from DRAM and NAND, and profit fall is directly attributable to recent price crash of both. finally
- deleted 8y ago
  [deleted]
graton 8y ago
Even with the price crash the prices are still higher than 2016. I purchased memory in 2016 and the price now is still about 30% higher than 2016.
- sanxiyn 8y ago
  Yes! People, Samsung Electronics is a public company. Here are public info on operating profit in USD: 25B (2016), 47B (2017), 54B (2018). 2019 Q1 profit is similar to 2016 Q1 profit. Things are simply going back to 2016 before DRAM/NAND price craze.
- ksec 8y ago
  May be that was early 2016 or mid 2016? The price hike started in somewhere near the the last quarter of 2016. The current price are already back to 2016 average, we expect the price to keep falling as we have yet to see any price floor. At the current rate, with nothing in sight to turn things around, we should see the early 2016 prices this year, and expect to see historic new low in DRAM $/GB within the next 12-14 months.
  - benj111 8y ago
    "we expect the price to keep falling" Who's 'we'? Are you speaking on behalf of someone. Your sig doesn't hint at anything.
- tooltalk 8y ago
  Yes, there was a major DRAM market crash in 2016 and it wouldn't probably make good sense to use that as a proper baseline.
chx 8y ago
> price crash of both. Example: https://www.amazon.com/gp/product/B07N124XDS https://www.amazon.com/gp/product/B07N124XDS a few months ago 32GB SODIMM was near unobtanium, a less known brand on eBay alone sold 'em for like 350-375 and now the Samsung ones are on Amazon at below 230 USD. Still has a 25-30% premium over smaller sticks but that's expected.
foobar1962 8y ago
I just had a conversation with somebody who asserted that Apple was bad (proprietary etc) and Samsung was good, and that Apple was 3rd phone maker behind Samsung and Huawei. He may be right about Apple being 3rd, but Apple looks to be the only one making a decent profit from their phones. How do they manage that when they have to pay for both hardware and software development, when all the others get the software for free?
- malux85 8y ago
  Because when the iPhone came out it was very expensive but significantly ahead of competition. People paid for it, even people who couldn’t afford it found a way to pay for an iPhone The huge cash burst into Apple meant everyone was scrambling to deal with them. Then economies of scale, negotiating leverage with third parties and sheer momentum propelled them
  - AceJohnny2 8y ago
    > Because when the iPhone came out it was very expensive but significantly ahead of competition. From a CPU perspective, they still are: https://www.anandtech.com/show/13392/the-iphone-xs-xs-max-review-unveiling-the-silicon-secrets/4 https://www.anandtech.com/show/13392/the-iphone-xs-xs-max-re... (for the rest of the features, that's indeed debatable) Fun fact: Samsung made the chip for the first iPhone. Steve Jobs was so dissatisfied with the experience that Apple bought PA Semi to design the chips in-house.
    - oblio 8y ago
      The thing is, that CPU bit is not really relevant for the average consumer, anymore. Flagship phone CPUs have been good enough for web browsing and casual app use for about 2 years. Not that I'm against extra horse power, we'll find a use for it. But we're in "desktop land", almost, for smartphone CPUs. They're good enough. The real smartphone battles now are in camera quality, gaming oomph and battery usage.
      - 8y ago

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.
  - sanxiyn 8y ago
    I heard from grapevine that cloud vendors accumulated DRAM stockpile. That's why CPU demand is high but DRAM demand is low.
  - lrem 8y ago
    These are not at odds. You want your machines to be uniform. If Intel calls you saying they'll deliver only two out of the ten thousand Xeon 1234-5 units you ordered this quarter, you call Samsung and cancel 80% of the order there.
blihp 8y ago
At least part of the DRAM issue is related to Intel's CPU supply issues being a drag on new PC sales.[1] But overall for DRAM and NAND, it's probably a case of market saturation in many sectors. [1] As well as AMD has been doing with Ryzen, most large computer purchasers are still Intel buyers and are slow to change.
iClaudiusX 8y ago
All the major SSD NAND flash producers finally hit volume production of 3D TLC NAND at roughly the same time last year which sent prices falling precipitously. I'm not aware of a similar pattern in DRAM, which if anything has been suspiciously high for a while to the point that many assume price fixing was to blame as has happened in the past.
- sanxiyn 8y ago
  I think people attributed DRAM demand to cloud computing hyperscaling. Demand was higher than actual demand, because all of Amazon, Microsoft, Google purchased DRAM assuming their market share would increase. Predicted market share probably totaled well over 100%.

caprese 8y ago

> Majority of profit came from DRAM and NAND, and profit fall is directly attributable to recent price crash of both. finally

deleted 8y ago
[deleted]

graton 8y ago

Even with the price crash the prices are still higher than 2016. I purchased memory in 2016 and the price now is still about 30% higher than 2016.

sanxiyn 8y ago
Yes! People, Samsung Electronics is a public company. Here are public info on operating profit in USD: 25B (2016), 47B (2017), 54B (2018). 2019 Q1 profit is similar to 2016 Q1 profit. Things are simply going back to 2016 before DRAM/NAND price craze.
ksec 8y ago
May be that was early 2016 or mid 2016? The price hike started in somewhere near the the last quarter of 2016. The current price are already back to 2016 average, we expect the price to keep falling as we have yet to see any price floor. At the current rate, with nothing in sight to turn things around, we should see the early 2016 prices this year, and expect to see historic new low in DRAM $/GB within the next 12-14 months.
- benj111 8y ago
  "we expect the price to keep falling" Who's 'we'? Are you speaking on behalf of someone. Your sig doesn't hint at anything.
tooltalk 8y ago
Yes, there was a major DRAM market crash in 2016 and it wouldn't probably make good sense to use that as a proper baseline.

chx 8y ago

> price crash of both. Example: https://www.amazon.com/gp/product/B07N124XDS https://www.amazon.com/gp/product/B07N124XDS a few months ago 32GB SODIMM was near unobtanium, a less known brand on eBay alone sold 'em for like 350-375 and now the Samsung ones are on Amazon at below 230 USD. Still has a 25-30% premium over smaller sticks but that's expected.

foobar1962 8y ago

I just had a conversation with somebody who asserted that Apple was bad (proprietary etc) and Samsung was good, and that Apple was 3rd phone maker behind Samsung and Huawei. He may be right about Apple being 3rd, but Apple looks to be the only one making a decent profit from their phones. How do they manage that when they have to pay for both hardware and software development, when all the others get the software for free?

malux85 8y ago
Because when the iPhone came out it was very expensive but significantly ahead of competition. People paid for it, even people who couldn’t afford it found a way to pay for an iPhone The huge cash burst into Apple meant everyone was scrambling to deal with them. Then economies of scale, negotiating leverage with third parties and sheer momentum propelled them
- AceJohnny2 8y ago
  > Because when the iPhone came out it was very expensive but significantly ahead of competition. From a CPU perspective, they still are: https://www.anandtech.com/show/13392/the-iphone-xs-xs-max-review-unveiling-the-silicon-secrets/4 https://www.anandtech.com/show/13392/the-iphone-xs-xs-max-re... (for the rest of the features, that's indeed debatable) Fun fact: Samsung made the chip for the first iPhone. Steve Jobs was so dissatisfied with the experience that Apple bought PA Semi to design the chips in-house.
  - oblio 8y ago
    The thing is, that CPU bit is not really relevant for the average consumer, anymore. Flagship phone CPUs have been good enough for web browsing and casual app use for about 2 years. Not that I'm against extra horse power, we'll find a use for it. But we're in "desktop land", almost, for smartphone CPUs. They're good enough. The real smartphone battles now are in camera quality, gaming oomph and battery usage.
    - 8y ago