Original title: Profit plummeted 53% Samsung Electronics will inevitably have thorns in the new year
On January 8, Samsung Electronics released its 2019 performance forecast, with annual profit falling by approximately 53% to 27.7 trillion won, the largest decline in ten years. In the past year, whether it is the semiconductor and panel business to the B side, or the home appliance and mobile phone business to the C side, Samsung Electronics seems to have performed poorly. Entering the new year, relevant experts believe that the large-scale application of 5G will give Samsung a respite, but the rise of Chinese manufacturers will also put a lot of competitive pressure on Samsung Electronics.
Continued decline in performance
Forecasts show that Samsung Electronics' sales in the fourth quarter of last year were 58 trillion to 60 trillion won, compared with 59.27 trillion won in the same period last year, and operating profit was about 7.1 trillion won, a year-on-year decrease of 34.26% and a chain decrease of 8.74%.
Last year, Samsung Electronics' operating profit was approximately 27.7 trillion won (approximately RMB 164.9 billion), a year-on-year decrease of 52.9%. According to foreign media, this is the largest annual profit decline of Samsung Electronics in ten years.
In fact, Samsung Electronics had a very strong performance in early 2018. However, this is due to strong market demand for its memory chips and other components. In the third quarter of 2018, Samsung Electronics' overall revenue reached 57.48 billion US dollars, an increase of 5.5% over the previous year; operating profit reached 15.4 billion US dollars, compared with 2017 During the same period, it increased by nearly 21%, setting a record high.
However, from the fourth quarter of 2018, Samsung Electronics' performance has undergone a "face change" and has been in a downward trend. Data show that Samsung Electronics' fourth-quarter 2018 revenue fell 10% year-on-year to 59.27 trillion won (approximately US $ 53.3 billion), and operating profit fell 29% year-on-year to 10.8 trillion won (approximately US $ 9.7 billion); in the first quarter of last year, the company Operating profit fell by 60.4% to 6.2 trillion won, lower than market expectations of 6.93 trillion won, with sales of 52 trillion won, a decrease of approximately 14% year-on-year; Samsung Electronics' operating profit in the second quarter was 6.6 trillion won, a sharp decrease year-on-year 55.6%, sales were 56.13 trillion won, a decrease of 4% year-on-year; in the third quarter, operating profit was 7.78 trillion won, a 55.7% decrease year-on-year, and net profit fell 52% to 6.3 trillion won.
A Beijing Business Daily reporter tried to contact Samsung Electronics for details on the fourth quarter of 2019 results, but a number of relevant persons have said they have left.
Samsung Electronics will disclose detailed financial data later this month.
to B-side demand slows
The industry has almost reached a consensus that the most important factor leading to the decline in Samsung Electronics' performance is the semiconductor business to the B side. Industry observer Liang Zhenpeng said that whether it is a mobile phone chip or a computer hard disk, the price has been declining since the second half of 2018, and this business has occupied most of Samsung Electronics. The reason why Samsung Electronics has repeatedly made profits in the past few years The new high is due to the rising prices of memory chips.
In fact, whether it is the fourth quarter of 2018 or last year, Samsung Electronics' explanation for the decline in performance is also the slowdown in chip demand and falling prices. Samsung Electronics said that the decline in operating profit last year was mainly due to the decline in global memory chip prices, as the memory chip business contributed 2/3 of Samsung's total profit. In the second quarter of last year, the semiconductor business contributed barely more than 50% of Samsung Electronics' profit, compared to 3/4 in 2018.
According to data released by Semiconductor Research Center of Semiconductor Consulting, the price of DRAM (Dynamic Random Access Memory) decreased by 10% and the price of NAND (Computer Storage Device) decreased by 15% last quarter. In addition, according to a related report from the Korea Semiconductor Industry Association, in February last year, the global unit price of 8GB system memory DRAM was US $ 5.9, a year-on-year decrease of 36.8%, while the global unit price of 128GB flash NAND flash was US $ 5, a year-on-year decrease of 25.2%. . At the same time, global inventories continue to climb.
This industry phenomenon affects not only Samsung Electronics. The 2019 MacClean Report released by semiconductor market research agency IC Insights shows that Samsung Electronics, Hynix and Micron Technology all saw a sharp decline in sales in the first half of last year. Among them, Samsung Electronics chip sales fell 33%, and Hynix declined 35 %, Micron fell 34%.
The panel business of Samsung Electronics to B is also facing crisis. As a pioneer of OLED panels, the status of LCD panels in the Samsung Electronics product line has continued to decline. It is reported that Samsung Electronics has now significantly reduced the production of 7th and 8.5th generation LCD panels. It is reported that the company is in final negotiations with Chinese manufacturers on the sale of its 8th generation LCD production line, which is called the 8 (8-1) generation or 8A production line, and ceased operations in the middle of last year. The production capacity reaches 80,000 pieces.
Industry observer Hong Shibin pointed out that this is because, on the one hand, domestic panel companies BOE and Huaxing Optoelectronics have gradually taken the initiative in the panel market; on the other hand, the oversupply of the LCD panel market has led to continuous decline in panel prices.
to C-end competitiveness decline
In addition to the chip and panel business, weak sales of home appliances and low-end and mid-range smartphones have also affected Samsung Electronics' performance. However, industry analysts said that these factors are expected to have a smaller impact on profits than chip sales.
In the highly competitive Chinese market, domestic manufacturers' pursuit of Samsung Electronics is comprehensive. According to data from Qunzhi Consulting, in the first three quarters of 2019, Samsung Color TVs shipped only 500,000 units in the Chinese market, a sharp drop of 26% year-on-year. Since 2017, the overall sales of Samsung's ice washing market have been declining. The offline statistics previously released by Zhongyikang show that in May 2018, the retail volume of Samsung refrigerators fell by more than 40% year-on-year, and sales fell by more than 30%; in June 2018, retail volume fell by 38.2% year-on-year, and retail sales fell 25.8%.
The high-end market positioned by Samsung refrigerators is also increasingly threatened by domestic brands such as Casa Di, Midea and Meiling, and the market space is constantly being squeezed.
"Samsung ’s mobile phone sales have weakened in the fourth quarter in the past, because the company will increase marketing efforts this quarter, which will lead to higher costs," said Lee Seung-woo of South Korean financial services agency Eugene Investment & Securities.
However, Samsung ’s mobile phone position in the global market is still strong. In the third quarter of 2019, the global smart phone shipment report released by IDC shows that the top three are Samsung, Huawei and Apple. For 2020, Samsung Electronics believes that with the worldwide spread of 5G networks, market competition is likely to be fierce. Samsung Electronics said it will release more 5G devices and foldable phone products to increase competitiveness.
Some analysts predict that Samsung Electronics' annual profit in 2020 will increase by nearly 40%. LeeSeung-woo believes that this performance estimate is a trough. This year's chip sales are expected to improve, which has already begun to manifest in the decline of enterprise memory chip inventory.
However, communication expert Ma Jihua emphasized that Chinese companies are increasingly investing in R & D in chips, memory processors, screens and other businesses, which will have a greater impact on Samsung Electronics in the future. Domestic chip companies and Samsung Electronics are direct competitors in the future, and will eat away Samsung's market share to a certain extent.
"For Samsung Electronics, we still need to adhere to the development of vertical integration of the industrial chain, but we need to pay attention to the balanced development of various businesses such as semiconductors, mobile communications, and consumer electronics. Excessive pressure on profit contributions will be brought to the semiconductor business. To manage business and financial risks. In addition, Samsung Electronics can also take advantage of hardware and make further arrangements in the software ecosystem to achieve a software-hardware business model upgrade, thereby improving financial performance and market imagination. Major General said.
(Responsible editor: Zhao Chao, Sun Hongli) Back to Sohu, see more