Friday, October 5th 2018

Memory, not smartphones, is what is really working at Samsung

Smartphones or TVs may be Samsung's most popular products, but they are certainly not the most profitable for the company. The South Korea electronics giant has announced its estimates for the third quarter of the year, and that data points to the company achieving the highest operating profit in its entire history. Samsung is set to reach 17.5 trillion won ($15.8 billion), up 20% from the same period last year. Not only that: revenues will also reach a record 65 trillion won ($57.3 billion), almost 5% more than last year.

The surprise of these results lies precisely in the products that have been the main protagonists of these revenues and profits. It wasn't smartphones, and in fact in the second quarter those lost more market share than any other manufacturer with a Galaxy S9 and a Galaxy S9+ whose sales haven't been as good as expected. TVs weren't that succesful either.
In Samsung what shines is the memory division: this year the company became the largest semiconductor manufacturer in terms of revenue surpassing Intel, and that relevance has been maintained and has grown. In the second quarter alone, its memory business grew 33% in revenue while the mobile division decreased 22% in revenue. The trend had already been pointed out by the giant in the second quarter of the year, and has been maintained throughout this year. Source: CNET
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21 Comments on Memory, not smartphones, is what is really working at Samsung

#1
xkm1948
Let’s bring those DRAM manufacturing job back to US! Another trade war with another Asian country here we go!
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#2
bonehead123
moohlah is moolah, regardless of where it comes from :D

But somethin tells me they didn't really lose any when I bought my 2 Note 9's the other day.....

And all that moolah from the memory division will allow them to spend more on R&D for their other product lines too, so it would appear to be a win-win-win situation for them and us too !
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#3
lexluthermiester
This should be a surprise to no one. Samsung is far more invested in it's semiconductor business than it's mobile device division.
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#4
Eric3988
This is why you diversify. That and help corner an already narrow but necessary market. Props to them but it would also be nice if they used these profits to expand capacity.
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#6
FreedomEclipse
~Technological Technocrat~
If samsung stopped hiring a massive arena, a few actors and a few hundred staff to run catering, event marshalls and security every time they release a new phone then im sure they will start making a profit.

Not everyone wants to see that shit. get some PR people to make a video talking about the phone and its features etc etc pay google to get it trending on youtube... you'd save a lot of money on overheads. problem solved.

dial back on the marketing/PR campaigns, spend less money so you can offer the fone up at a more reasonable 'affordable' price otherwise you are almost doomed to fail.

People used to joke about chinese phones but companies like Xiaomi, Oppo and a few others are absolutely destroying the market when it comes to bang for buck.


Pocophone F1 is about $300, and the specs are almost similar to the more expensive samsung S9 which is $800-1000+??? you get so much phone for your money for $300 with the F1.
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#7
R0H1T
FreedomEclipse said:
If samsung stopped hiring a massive arena, a few actors and a few hundred staff to run catering, event marshalls and security every time they release a new phone then im sure they will start making a profit.

Not everyone wants to see that shit. get some PR people to make a video talking about the phone and its features etc etc pay google to get it trending on youtube... you'd save a lot of money on overheads. problem solved.

dial back on the marketing/PR campaigns, spend less money so you can offer the fone up at a more reasonable 'affordable' price otherwise you are almost doomed to fail.

People used to joke about chinese phones but companies like Xiaomi, Oppo and a few others are absolutely destroying the market when it comes to bang for buck.


Pocophone F1 is about $300, and the specs are almost similar to the more expensive samsung S9 which is $800-1000+??? you get so much phone for your money for $300 with the F1.
Pocofone is also cheap because Xiaomi sells millions of SD425~660 phones (most are overpriced IMO) in the $200~400 price bracket. While I agree that SS needs to reduce its prices, their cost of operations is also higher. Not to mention the Chinese have to spend way less & have virtually non existent after sales support.
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#8
FordGT90Concept
"I go fast!1!11!1!"
More evidence the DRAM cartel is back in force.
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#9
stimpy88
It's amazing what a nice bit of price fixing and market collusion will do for your financials!

Crooked company.
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#10
Readlight
Tech and data collection are designed to make money to be addicting, product whit no value.
android is no good. Samsung makes everything.
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#11
fynxer
Memory manufacturing is better than printing money, especially when you control the market prices.

Manufacturers together manipulating memory prices should be looked at as an international crime syndicate.

They cheat customers in every corner of the world out of hundreds of Billions of dollars, how can that not be criminal.

You can not just fine these guys with a few billions, it is chump change for them, threaten them with 30-50 years in jail and you will see them stop immediately.
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#12
ssdpro
Reading these comment sections is becoming unbearable. Purposeful agitation, wild conspiracy theory, jealousy, and ignorance fuel more than half of the posts. Look at some of these quotes:

"It's amazing what a nice bit of price fixing and market collusion will do for your financials!"
"Crooked company. "
"android is no good" (in an article about Samsung mind you)
"Memory manufacturing is better than printing money, especially when you control the market prices."
"They cheat customers in every corner of the world out of hundreds of Billions of dollars, how can that not be criminal."

All of this from users that can't even imagine the engineering and cost of producing complex memory that continually needs to update and change. It seems to me memory is still wildly cheap considering the tasks it handles. The whole concept of price fixing can;t even apply here. Price fixing needs to involve a valuable item that is a necessity for a small fixed set of consumers. The price can be set so high the consumer in need cannot afford and thus incurs damage. Memory is so wide spread and necessary the market sets the price consumers will pay and maintains the highest profitability possible.
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#13
Prince Valiant
Price fixing is an agreement between companies to control prices. Samsung is being investigated for price fixing again and they've been convicted for it before. There's no wild conspiracy theory in that.
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#14
stimpy88
ssdpro said:
Reading these comment sections is becoming unbearable. Purposeful agitation, wild conspiracy theory, jealousy, and ignorance fuel more than half of the posts. Look at some of these quotes:

"It's amazing what a nice bit of price fixing and market collusion will do for your financials!"
"Crooked company. "
"android is no good" (in an article about Samsung mind you)
"Memory manufacturing is better than printing money, especially when you control the market prices."
"They cheat customers in every corner of the world out of hundreds of Billions of dollars, how can that not be criminal."

All of this from users that can't even imagine the engineering and cost of producing complex memory that continually needs to update and change. It seems to me memory is still wildly cheap considering the tasks it handles. The whole concept of price fixing can;t even apply here. Price fixing needs to involve a valuable item that is a necessity for a small fixed set of consumers. The price can be set so high the consumer in need cannot afford and thus incurs damage. Memory is so wide spread and necessary the market sets the price consumers will pay and maintains the highest profitability possible.
Bullshit. It costs almost nothing to build memory. It's just capacitors and a few transistors. It is the reason that whenever a new manufacturing node comes on line, the first thing they do to test it, is make a few dense memory chips. It's cheap and easy, and no, it hardly ever changes, that's the reason why it's so simple and cheap. Why don't you take the time to read up on how its made, before trying to spread your ignorance.

You must be living under a rock not hearing about the Chinese government opening an investigation as to collusion between DRAM makers... Or maybe you enjoy paying $160 for some middle of the road DDR memory, I however, remember when it cost nearly a quarter of that, and they were still making big profit then!

Just go back to sleep now, before lashing out at the more informed, more money conscious people here.
Posted on Reply
#15
ZeDestructor
R0H1T said:
Pocofone is also cheap because Xiaomi sells millions of SD425~660 phones (most are overpriced IMO) in the $200~400 price bracket. While I agree that SS needs to reduce its prices, their cost of operations is also higher. Not to mention the Chinese have to spend way less & have virtually non existent after sales support.
Samsung also sells millions of $100-400 android phones, just not in the US, but rather in India and China. This is alsow hy Samsung is losing marketshare: when things like the pocophone, zenfone 5, or even the increasingly expensive oneplus cost half or less than half when their flagships cost, all of a sudden the cachet of buying samsung slowly erodes.
Posted on Reply
#16
R0H1T
ZeDestructor said:
Samsung also sells millions of $100-400 android phones, just not in the US, but rather in India and China. This is alsow hy Samsung is losing marketshare: when things like the pocophone, zenfone 5, or even the increasingly expensive oneplus cost half or less than half when their flagships cost, all of a sudden the cachet of buying samsung slowly erodes.
Xiaomi already has multiple assembly plants in India, they also enjoy huge tax breaks. Sammy on the other hand is still importing the vast majority of their products, in India, from China ~ where they've lost huge marketshare thanks to the domestic competition. The landing costs are higher, hence the price. The marketing & "mindshare" of Chinese brands in India is also better wrt Samsung, wrongly so IMO. So while you're right about the top end of Samsung being OTT in terms of price, the mid range from Xiaomi or BBK electronics isn't much better. Though again the latter two have lower cost of operations & enjoy much better margins thanks to local tax breaks & direct/indirect assistance from China.

The point I'm trying to make is that Samsung can be criticized for some of their absurd pricing, not all of it is due to their "greed" & a large part of it goes to their after sales support ~ which in India is way ahead of any of their Chinese rivals.
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#17
hyp36rmax
Its always about memory and nand. This is the main commodity for their business. Phones are just another product for cashflow and most likely supplements their business. It doesn't hurt those same phones help allocate and move some of that nand Samsung has.
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#18
Minus Infinity
No surprise Samsung TV's aren't doing well. They have lost a huge amount of market share since they eschewed OLED and went for QLED instead. People don't want them. Their phones have barely changed in 4 generations, big deal newer SoC, better camera, much higher prices.
Posted on Reply
#19
hat
Enthusiast
Minus Infinity said:
No surprise Samsung TV's aren't doing well. They have lost a huge amount of market share since they eschewed OLED and went for QLED instead. People don't want them. Their phones have barely changed in 4 generations, big deal newer SoC, better camera, much higher prices.
Isn't that basically every smartphone ever?
Posted on Reply
#20
NC37
stimpy88 said:
Bullshit. It costs almost nothing to build memory. It's just capacitors and a few transistors. It is the reason that whenever a new manufacturing node comes on line, the first thing they do to test it, is make a few dense memory chips. It's cheap and easy, and no, it hardly ever changes, that's the reason why it's so simple and cheap. Why don't you take the time to read up on how its made, before trying to spread your ignorance.

You must be living under a rock not hearing about the Chinese government opening an investigation as to collusion between DRAM makers... Or maybe you enjoy paying $160 for some middle of the road DDR memory, I however, remember when it cost nearly a quarter of that, and they were still making big profit then!

Just go back to sleep now, before lashing out at the more informed, more money conscious people here.
I remember getting a settlement check from the last time they got caught price fixing and back then, yeah the prices were generally under $100 and seen as extreme.
Posted on Reply
#21
ZeDestructor
R0H1T said:
Xiaomi already has multiple assembly plants in India, they also enjoy huge tax breaks. Sammy on the other hand is still importing the vast majority of their products, in India, from China ~ where they've lost huge marketshare thanks to the domestic competition. The landing costs are higher, hence the price. The marketing & "mindshare" of Chinese brands in India is also better wrt Samsung, wrongly so IMO. So while you're right about the top end of Samsung being OTT in terms of price, the mid range from Xiaomi or BBK electronics isn't much better. Though again the latter two have lower cost of operations & enjoy much better margins thanks to local tax breaks & direct/indirect assistance from China.

The point I'm trying to make is that Samsung can be criticized for some of their absurd pricing, not all of it is due to their "greed" & a large part of it goes to their after sales support ~ which in India is way ahead of any of their Chinese rivals.
Heh. Didn't know that they had factories in India. That really does a number to the margins.
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