In its most recent earnings call, the company said its quarterly operating profit had fallen by around 60%, due to slowing demand on its consumer-facing and enterprise businesses.
Samsung’s size and global reach means it is vulnerable to headwinds from different parts of the globe. From China, the threat of trade disruption is hampering investment. Much of it comes from slowing smartphone sales, which have not only affected Samsung – US company Apple recently made headlines with its move into a greater service business, following a slight downturn in iPhone sales forecasts.
These downturns in the sector hit Samsung particularly hard. The company makes the displays that light up the iPhone, for instance. But the company also makes the widely used dynamic random-access memory chips that power computers and servers, and this part of the business slumped by almost 30% in the first quarter, with further turbulence expected in the market.
It is not for lack of advertising. In December, Samsung unseated P&G as the world’s largest advertiser, according to Ad Age. This was, in part, driven by the need to advertise its way out of the exploding Galaxy Note 7 debacle in 2017.
Its smartphone division was quite different, however, estimating a diminished profit, but a profit nonetheless. This was driven in part by the Galaxy S10 smartphone, as well as the hype over its new folding device. It is also betting heavily on 5G.
In an interview with French newspape Le Figaro, CEO of mobile DJ Koh maintained Samsung was still in a powerful position: “[It] has been a leader in the smartphone market for 10 years and will remain so for the next 10 years by continuing to innovate and imagine new mobile experiences.”
Core to its future strength, Koh said, will be the folding phone, the new imagined experience. “I see a huge potential for the segment of foldable smartphones," he said. "Consumers are looking for larger screens without sacrificing portability.
“Samsung’s foldable smartphone is not just a new category, we’re writing the next chapter of the mobile industry. We created the Galaxy Fold to directly change the way consumers use their phones – everywhere and for everything.”
Sourced from the Financial Times, Ad Age, Le Figaro, additional content by WARC staff