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Samsung profits tumble as it warns of ‘challenges’ ahead

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Samsung Electronics saw profits plunge in the second quarter as its key chip business faltered, and the firm also warned of “challenges” ahead.

The world’s biggest smartphone and memory chip maker said operating profit fell 56% from a year earlier.

The results reflect a broader industry slowdown, weighed down by the US-China trade war.

The firm also faces more possible disruption to its chip business due to a trade row between Seoul and Tokyo.

The South Korean firm posted operating profit of 6.6 trillion Korean won ($5.6bn; £4.6bn) for the three months to June, a 56% drop from the 14.87 trillion Korean won posted in the same period a year earlier. The result was in line with company estimates.

In a statement, Samsung said weakness and price falls in the memory chip market continued “despite a limited recovery in demand”.

“The company is facing challenges from uncertainties not only in business areas but also from changes in the global macroeconomic environment,” it said.

Japan recently imposed export curbs on certain industrial materials that Seoul needs to make semiconductors and display screens.

The move has raised concerns over the risk the trade spat presents to global technology supplies, and could affect Samsung’s future earnings.

The company also said it would focus on the launch of new products in the third quarter including its first folding smartphone, which got off to a shaky start.

Samsung had to delay the launch of its new foldable smartphone earlier this year following reports of broken screens.

The defects with the device proved a source of embarrassment for the firm, which has seen declining smartphone sales and faces growing competition from rivals including China’s Huawei.

Last week, Samsung said the Galaxy Fold will go on sale in September after improvements were made to the smartphone.

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