Samsung Electronics announces results for the first quarter of 2020

[CrazyBoy28]

Samsung Electronics announced the first quarter of 2020 with 55.33 trillion won in sales and 6.45 trillion won in operating profit.

Sales in the first quarter fell 7.6% QoQ due to the low demand for display, CE, and some corona19. Compared to the same period last year, the increase in demand for server and PC parts increased 5.6%.

Despite an improvement in memory performance compared to the previous quarter, operating profit decreased by KRW 0.7 trillion due to the same factors as sales decrease, but increased by KRW 0.2 trillion due to the improvement of wireless product mix and continued diversification of small and medium-sized OLED customers compared to the same period last year.

In the semiconductor sector, memory and server- and PC-oriented demand remained solid, while profits improved QoQ due to continued mobile demand. System semiconductors increased profits by expanding supply of mobile parts for major customers.

In the DP division, small- and medium-sized panels lost profits QoQ due to the off-season, but deficit narrowed slightly for large-sized panels due to a slowdown in selling prices.

In the IM division, sales volume decreased due to the global spread of Corona19 at the end of the quarter, but profits increased QoQ and YoY due to improved product mix and efficient marketing expenses following the launch of flagships such as the S20.

The CE division's earnings decreased QoQ due to the off-peak season and corona19.

The Haman division suffered significantly from the previous quarter due to the large impact of one-time costs related to the relocation of factories in Europe.

In relation to the 1Q welcome sentiment, the strong dollar and the euro had a positive impact on the parts business, but major growth market currencies were weaker than the won and the overall operating profit was insignificant.

[2Q and 2H outlook]

In 2Q, earnings are expected to drop QoQ as the effect of Corona19 on the demand for major products is in full swing.

In the parts business, memory and server and PC demand are expected to remain solid, but the risk of slowing mobile demand remains. OLED earnings are expected to weaken due to the sluggish smartphone market.

In the set business, sales and performance of major products are expected to drop sharply due to shrinking demand from Corona 19, store closures, and plant shutdowns.

Haman is expected to continue its weak earnings amid the temporary shutdown of global auto factories.

High uncertainties related to Corona19 will likely continue in 2H.

In the case of the parts business, memory will strengthen technological leadership and cost competitiveness through micro-process conversion, and OLED plans to actively expand new applications while responding to new product demand.

In the case of the set business, we plan to continue preparing innovative products that will further enhance the consumer experience.

Wireless plans to actively promote lineups such as foldable and note new products and mid / low-priced 5G expansion.

The CE division plans to promote efficient marketing and promotion considering market conditions by country.

[Facilities Investment]

Facility investment in the first quarter was about 7.3 trillion won, which is 6 trillion won for semiconductors and 0.8 trillion won for displays by business.

Memory continues to invest in expansion and process conversion as previously planned, and foundries have been focused on expanding to respond to EUV microprocess demand.

[Details by section]

□ Semiconductor

Semiconductors posted sales of 17.64 trillion won and operating profit of 3.99 trillion won in the first quarter.

In the first quarter, despite seasonal seasonality and the spread of Corona19, profits improved slightly as server- and PC-oriented demand remained strong and mobile demand continued due to increased telecommuting and online education.

The risk of slowing mobile demand will remain in 2Q, but demand for servers and PCs is expected to continue, and solid demand is expected to be maintained across applications.

Samsung Electronics will focus on expanding the demand for high-capacity, high-value-added server SSDs with more than 2TB, and plans to secure cost competitiveness by expanding the 5th generation V-NAND conversion.

The memory market in the second half is highly uncertain due to Corona19, but demand for high-end and high-performance memory is expected to continue to grow as new lifestyles based on online services rapidly spread.

Samsung Electronics plans to focus on strengthening technological leadership and cost competitiveness by accelerating the fine process conversion, such as 1z nano DRAM and 6th generation V-NAND, while flexibly adjusting investment and product-specific production proportions according to market fluctuations.

In 1Q, the system LSI business increased QoQ with the expansion of supply of 5G mobile processors and ultra-high-resolution image sensors with the launch of a new premium smartphone model in 2020.

In 2Q, overall demand is expected to contract due to Corona19, and the company plans to expand supply centering on 5G System on Chip (SoC) and premium image sensors.

In the second half of the year, it plans to launch new products with competitive edge and expand new applications.

In the first quarter, 5G and image sensor chip demand increased, but earnings declined QoQ due to the decline in Chinese High Performance Computing (HPC) demand.

In the second quarter, the company plans to expand its EUV (Extreme Ultra Violet) process leadership by mass-producing 5 nanometers and continue to promote product orders for processes below 5 nanometers.

In the second half, we continue to invest in fine processes with diversification of applications for consumer and computing, secure competitiveness through full-scale mass production and improvement of 5 nano FinFET process, and GAA (Gate-All-Around) 3 nano process It will also continue to develop.

□ Display Panel

In the display business, sales in the first quarter were 6.59 trillion won and operating profit was 0.29 trillion won.

The 1Q display business fell QoQ due to a decrease in overall panel sales.

The small and medium-sized display business in 2Q is expected to deteriorate due to a decrease in customer demand, but will focus on improving sales based on differentiated product performance and design.

In the large display business, the market is expected to stagnate due to the delay of global sports events.

In the second half of the year, there is uncertainty over the recovery of demand in the small and medium-sized display business, but plans to secure leadership by expanding the market for new products such as foldable smartphones.

In the large-scale display business, the LCD line will shrink, but it will continue to develop new technology-based products by responding seamlessly to customer demand.

□ IM (IT & Mobile Communications)

In the first quarter, the IM division recorded sales of 26 trillion won and operating profit of 2.65 trillion won.

In the wireless business, smartphone sales decreased QoQ due to the spread of Corona 19 at the end of the quarter, but
profits improved QoQ and YoY thanks to flagship product launches such as the Galaxy S20 · Z Flip and efficient marketing operations .

In the second quarter, as global demand contracts due to the spread of Corona 19 in earnest, earnings are inevitable, and plans to strengthen the online and B2B channels and promote cost efficiency.

In addition, it plans to respond flexibly to market demands by actively utilizing diversified global manufacturing capabilities.

In the second half of the year, demand uncertainties still exist, and competition between companies to make up for sluggish performance in the first half is expected to intensify.

Samsung Electronics plans to strengthen the competitiveness of the entire lineup by releasing premium new models such as foldable notes and mid-to-low-priced 5G and improving overall operational efficiency such as production, supply, channel, and marketing.

In the first quarter, the network business improved QoQ in line with the expansion of 5G commercialization at home and abroad.

Although there are uncertainties such as delayed or reduced 5G investments at home and abroad due to the impact of Corona 19 in the second quarter and the second half, Samsung Electronics plans to secure technological competitiveness and strengthen its global capabilities to strengthen its mid- to long-term 5G business base.

□ CE (Consumer Electronics)

In the first quarter, the CE division recorded sales of 10.3 trillion won and operating profit of 0.45 trillion won.

The TV business saw a decrease in performance compared to the previous quarter and the previous year due to the seasonal low season and the influence of Corona 19, but by expanding the sales of QLED, ultra-large and lifestyle TVs, it expanded market share in the premium TV market
and solidified its leadership.

The TV market in 2Q is expected to contract from the previous year due to the worsening market conditions and postponed global sports events, and plans to actively respond to online purchase demand by expanding online promotions and lineup operations.

For consumers who prefer content consumption, it plans to expand sales of ultra-large and QLED 8K TVs based on ultra-high definition and vivid sound, and provide a differentiated consumer experience based on smart TV features such as homeschooling and home office.

In the first quarter of the year, the home appliance business saw a slight improvement compared to the previous year due to strong sales of premium products such as Grande AI washing machines and dryers, while demand for global home appliances decreased.

In the second quarter, it plans to focus on responding to the crisis by continuously strengthening online sales, cooperating with distributors, and optimizing marketing strategies.

In the second half of the year, the global TV and consumer electronics market is likely to have high uncertainties, such as the possibility of a global economic downturn, but we plan to focus on minimizing sales disruptions by efficiently operating marketing and optimizing logistics operations in consideration of country-specific situations.

[Related to Corona 19]

Samsung Electronics puts top priority on the health and safety of its employees and their families, composes Corona 19-response T / Fs for regional managers at home and abroad, and takes appropriate and quick responses in accordance with the latest guidelines published by national health authorities.

In addition, Samsung Electronics is working closely with major partners to solve various issues arising from Corona 19 while sharing information.

And we are doing our best to provide customers with stable products and services by flexibly utilizing Samsung Electronics' global production base and supply chain.

In addition, donations, medical supplies, electronic products and devices for online education were supported by countries around the world to actively participate in the government and community efforts to overcome Corona19. In Korea, the
company provides facilities to be used as a treatment center, and technology is provided to domestic mask production companies.

In addition, all employees are contemplating ways to further contribute to customers and communities based on the company's skills and capabilities.

In terms of performance, Samsung Electronics achieved solid results despite difficult business conditions in the first quarter.

However, as Corona 19 began to spread globally from March, production and sales disruption and demand contraction continued due to the shutdown of some production facilities and the closure of distribution networks, supply chains, and offline stores.
As a result, the second quarter is expected to have difficulties centering on the set business, and uncertainties remain in the second half.

Samsung Electronics will closely monitor the situation and focus on minimizing the impact on business and customers through flexible and prompt responses based on technological leadership and product competitiveness.

In addition, after the Corona 19 issue has passed, Samsung Electronics will do its best to prepare for future sustainable growth, such as enhancing the competitiveness of its flagship business and strategic R & D investment.

[Raghavendra98]

Too long Didn't Read version;

Except for computer components, every other Samsung Electronics sector has experienced downfall. This is still solid business considering CoViD 19.