Samsung to focus on premium TVs, chips

Samsung Electronics on Thursday hinted at cutting prices of its flagship smartphones later this year, pledging to focus on premium TVs and chips for more profits.

The Korean tech giant announced an 8 percent drop in second-quarter net profits at the company’s conference call on the day as its smartphone business remained sluggish on lackluster Galaxy S6 sales.

Net income came to 5.75 trillion won ($4.95 billion) in the April-June period, 7.97 percent down from 6.25 trillion won a year earlier.

Sales fell 7.29 percent on-year to 48.53 trillion won in the second quarter, and operating profit also dropped 4.03 percent to 6.90 trillion won.

Samsung said the operating profit of the information technology and mobile business division, one of the company’s main revenue sources, fell 37.5 percent on-year to 2.76 trillion won in the second quarter.

The company said handset sales slipped 6.3 percent on-year in the second quarter to 89 million units, indicating that the Galaxy S6 series, which was launched in April, posted weak sales. Of the handset shipments, smartphones accounted for about 80 percent.

“In the latter half, we will take a more flexible pricing policy for the Galaxy S6 and S6 Edge,” said Park Jin-young, executive director of Samsung’s mobile business division, hinting at price cuts to elevate the flagship phone sales.

“We will launch new high-end smartphones to maintain the current sales momentum.”

Amid the sluggish mobile business, the company pinned high hopes on SUHD TVs, chips and displays.

Samsung’s chip division was the biggest beneficiary of the new S6 as the flagship smartphone switched to in-house applications processors and chips instead of those from Qualcomm.

The company is reported to have won orders for the main processors in Apple’s new iPhone.

The company said it plans to sell its flexible OLED display that was adopted into the curved-screen Galaxy S6 Edge to other makers.

“We have solved production constraints now. We plan to expand revenue sources to meet the market demands,” Lee Chang-hoon, a Samsung Display executive, said of the possible curved display sales.

At a separate board meeting, Samsung also doubled interim dividend to 1,000 won per share.

By Lee Ji-yoon (jylee@heraldcorp.com)