Samsung Electronics has revealed that its second-quarter operating profit will be around half what it was this time last year, falling 56 percent to 6.5 trillion won ($5.56 billion).

The company released its earnings guidance yesterday and also stated that revenue is predicted to drop approximately 4 percent, falling to 56 trillion won ($47.89 billion).

The reasons for the fall aren’t being explained by Samsung itself, but industry experts have hinted that the recent drama involving Huawei and its suppliers has impacted Samsung’s chip business – a major part of the firm’s revenue.

It Hasn’t Been This Bad Since The Galaxy Note 7 Disaster…

Whatever the reason, this is Samsung’s lowest profit since the Galaxy Note 7 (quite literally) exploded into the media back in Q3 2016 – and things could be worse in the next quarter, because in Q2 2019 Samsung benefitted from a one-off 800 billion won ($684 million) payment by Apple (which uses Samsung’s OLED displays in its iPhones), which missed a sales target.

Samsung’s admission that its profits are slipping isn’t just bad news for the Korean firm – it’s a worrying indicator that the smartphone industry, in general, is struggling. Samsung’s Galaxy Fold handset was expected to boost the firm’s fortunes in 2019 but it has been delayed following issues with its design, and although Samsung has reportedly fixed this problem now, a solid release date is still to be announced.

People are holding onto their existing phones for longer as there is little reason to upgrade beyond getting a power boost and a better camera – and that doesn’t help companies like Samsung or Apple when it comes to hitting sales targets.

Source: The Verge