Samsung Electronics' operating profit halves in 2019 on chip downturn

Source: Xinhua | 2020-01-31

Samsung Electronics, South Korea's tech behemoth, saw operating profit more than halve last year due mainly to the downturn of the global semiconductor industry, a regulatory filing data showed Thursday.

Operating profit amounted to 27.8 trillion won (23.5 billion U.S. dollars) in 2019, down 52.8 percent from the prior year. It marked the lowest yearly profit since 2015.

Revenue fell 5.5 percent to 230.4 trillion won (194.6 billion U.S. dollars), and net income plunged 51 percent to 21.7 trillion won (18.3 billion U.S. dollars).

The global chip industry's downturn led to lower product price, hitting Samsung's chip business earnings last year.

The chip-making business posted an operating profit of 14 trillion won (11.8 billion U.S. dollars) on revenue of 64.9 trillion won (54.8 billion U.S. dollars) in 2019.

The profit plummeted 69 percent from the previous year, with the revenue sliding 25 percent in the year.

Operating profit of the display panel division retreated 40 percent to 1.6 trillion won (1.4 billion U.S. dollars) on the supply glut that led to lower product price.

The IM unit, which manufactures smartphones, logged an operating profit of 9.3 trillion won (7.9 billion U.S. dollars) in 2019, after recording 10.2 trillion won (8.6 billion U.S. dollars) in 2018 and 11.8 trillion won (10 billion U.S. dollars) in 2017 each.

The sale of Galaxy S10, Samsung's flagship smartphone, was sluggish in the first half, while the production cost of Galaxy A series increased last year.

The IM unit's revenue rose from 100.7 trillion won (85 billion U.S. dollars) in 2018 to 107.3 trillion won (90.6 billion U.S. dollars) in 2019.

The consumer electronics division's operating profit expanded 30 percent to 2.6 trillion won (2.2 billion U.S. dollars) last year on strong demand for TVs and refrigerators of large size.

During the October-December quarter, operating profit tumbled 33.7 percent from a year earlier to 7.2 trillion won (6.1 billion U.S. dollars).

Revenue added 1.1 percent over the year to 59.9 trillion won (50.5 billion U.S. dollars) in the fourth quarter, but net income dropped 38.2 percent to 5.2 trillion won (4.4 billion U.S. dollars).

Revenue of the chip-making unit reduced 5 percent from the previous quarter to 16.8 trillion won (14.2 billion U.S. dollars) in the fourth quarter, but its operating profit advanced 13 percent to 3.5 trillion won (3 billion U.S. dollars).

The on-quarter increase raised expectations for the recovery of the global chip industry in the first half of this year.

The display panel division's operating profit plunged 77 percent from a year earlier to 220 billion won (185.8 million U.S. dollars) in the fourth quarter amid the increased supply of large-size display panels.

Revenue of the IM business gained 7 percent over the year to 25 trillion won (21 billion U.S. dollars) in the December quarter, while its operating profit surged 67 percent to 2.5 trillion won (2.1 billion U.S. dollars).

It was attributed to demand for flagship smartphones and the new lineup of Galaxy A series.

The consumer electronics unit's operating profit advanced 19 percent over the year to 810 billion won (684.2 million U.S. dollars) in the fourth quarter on an increased sale of large-size TVs and an enhanced profitability for refrigerator and washing machine.

Samsung spent about 26.9 trillion won (22.7 billion U.S. dollars) on facility investment in 2019, including 22.6 trillion won (19 billion U.S. dollars) in the semiconductor business and 2.2 trillion won (1.9 billion U.S. dollars) in the display panel unit.