Hong Kong (CNN Business): Samsung’s operating profit plunged 60% in the first quarter, as the South Korean technology company grapples with the delayed launch of its troubled Galaxy Foldphone and waning demand for its memory chips.
The world’s largest smartphone maker reported an operating profit of 6.2 trillion won ($5.3 billion) for the first quarter on Tuesday, compared to 15.6 trillion won ($13.4 billion) the year before.
Sales for the three months ended inMarch dropped around 14% to 52.4 trillion won ($45 billion).Shares in Samsung fell about 1% in morning trading in Seoul.Samsung blamed the earnings slump on a stagnant global smartphone market and slowing demand for memory chips.
Operatingprofit for the latest quarter was the lowest since late 2016, when Samsung was dealing with the Galaxy Note 7 fiasco. Millions of those devices had to be recalled due to reports of exploding batteries.
The dismal earnings report comes a week after Samsung announced it was delaying the launch of its highly anticipated foldable smartphone. Several reviews of the Galaxy Fold reported defective hinges and screens that broke after removing the Fold’s protective film.
During an earnings call Tuesday, the company said it analyzed the Galaxy Folds returned by early reviewers, and found damage “due to force applied” to the display near the top and bottom part of the phone’s hinge — the area where the screen is less protected.
The company said it is trying to fix the problem, but also appeared to shift some of the blame to how reviewers used the phone.”We need to provide and prepare better communication with customers on how to use the Galaxy Fold,” Robert Yi, Samsung Electronics’ head of investor relations, said during the earnings call. An updated launch schedule will be announced in the next few weeks, he added.It is a setback for Samsung, which has worked to win back consumer trust following the Note 7 debacle.
The company is also facing increasing competition from rival smartphone maker Huawei, which is set to launch its foldable phone in the coming months.
The Galaxy Fold delay isn’t going to affect Samsung’s current market position since foldables are “nowhere close to mass market adoption,” said Kiranjeet Kaur, an analyst with research firm IDC.But “if Huawei’s foldable smartphone makes an appearance fault-free, it could dent Samsung’s image in the process,” she added. More