At first sight, Samsung’s latest full financial results are nothing short of spectacular, with the semiconductor, smartphone, tablet, smartwatch, TV and home appliance giant flaunting a new record second-quarter revenue to keep investors happy and media coverage (largely) positive.
But while the company’s operating profit is also increasing year-over-year, from Korean Won 12.57 trillion in the second quarter of 2021 to KRW 14.1 trillion ($10.8 billion) between April and June 2022, at least one crucial division it not great. from the always crucial profitability point of view.
What’s going wrong?
This is, you guessed it, the mobile (aka MX and Networks) business, which managed to bring in more than a decent 29.34 trillion won in consolidated revenue, while posting a fairly modest profit of about $2 billion during the second calendar quarter of this year.
That’s KRW 2.62 trillion in operating profit for Samsung’s leading smartphones, down from 3.24 and 3.82 trillion won in Q2 2021
and Q1 2022
respectively. Before you even think about it, you should know that both the Galaxy S22 and Galaxy Tab S8 families of ultra-high-end mobile devices are specifically marked as “solid” performers in the tech giant’s latest financial report, which means the division’s problems may lie elsewhere.
The S22 Ultra is a hit according to several sources.
The underwhelming and late Galaxy S21 FE and the not-so-valued newest members of the mid-range Galaxy A lineup are just the first suspects that come to mind, although Samsung clearly doesn’t name and shame underperforming products, instead blaming more general (and generic) stuff. such as the “rising costs of components and logistics, as well as negative effects of currency movements” for “somewhat” from the shrinking profits of its mobile business.
Meanwhile, “prolonged geopolitical issues and economic uncertainties” could cause revenues to remain “year-over-year” into the second half of 2022, while the Galaxy Z Fold 4 and Z Flip 4 are expected to deliver “solid profitability.”
Pre-order now the Galaxy Z Fold 4 and Z Flip 4
In other words, Samsung braces for sluggish smartphone sales and higher earnings after its next big foldables are released, which is probably better than seeing revenues rise and profits fall.
Another challenging few months ahead
Intriguingly, the company uses the term “mainstream” not once and not twice but three times in connection with its “new folding models” (which are technically unnamed), strongly suggesting that the The shipping numbers of the Z Flip 4 and Z Fold 4 will come close to the historic “mainstream” results of the defunct Galaxy Note family.
It looks like we’re officially entering a new chapter in the evolution of the mobile industry, and despite so many political and economic hurdles, Samsung is poised to keep making the big bucks on phones…besides memory chips and displays.
The Galaxy Z Flip 4 is expected to sell like hot cakes soon.
The ever thriving memory business (included in the larger Device Solutions division), in case you’re wondering, unsurprisingly, it also generated the bulk of Samsung’s operating profit during the April – June 2022 period.
We’re talking a whopping KRW 9.98 trillion in the green, roughly equating to $7.7 billion, which won the division’s already monumental profit scores of 6.93 and 8.45 trillion in Q2 2021 and Q2 respectively. Q1 2022 were booked, improving.
But while demand for servers should remain solid for memory products through the end of the year, the slumps in the PC and mobile markets could also affect this business, at least to some degree.
Samsung also interestingly mentions smartwatches for…possibly the first time ever in any of its overall financial outlook, predicting “high growth momentum with the release of new” models (hey there, Galaxy Watch 5 and Watch 5 Pro!) despite “short-term economic uncertainties” that are also expected to affect this global market… to some extent.