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Samsung reported its Q2 2015 revenue, overall profit ~$6 billion which is down ~4% from an year ago.
The main contributor in lower profit is poor sales of Galaxy S6. The mobile division profit was at $2.36 billion
which is slightly better than previous quarter, but is ~38% decline from an year ago.
It's clear Galaxy S6 can't match the price of iPhone 6. Samsung is considering adjusting the price to increase sale.
Is it late for Galaxy to catch the train? Apple will be unveiling its new iPhone in usual time Sep, or earlier this time according to rumors.
Earlier IDC had reported Samsung's market share decline to 21.7%, an y-o-y decline of 2.3%. Apple's market share was 14.1%, an y-o-y increase of 34.9%
Compare to revenue of Q2 2014, Display product group has a small growth, Semiconductor group gained $1.51 Trillion KRW , but all other Samsung divisions' revenue declined on the Year to Year base.
The Semiconductor group made $11.29 Trillion KRW revenue with $8.49 Trillion KRW from memory products. So I assumed the rest $2.80 Trillion KRW (11.29 - 8.49) is from foundries services. In 2Q2014, $9.78Trillion KRW revenue is from Semiconductor group ($6.92 Trillion KRW from memory, $2.86 Trillion KRW from foundries).
So my question is with all the Samsung Exynos insourcing and rumored several Samsung foundry customers wins, this almost flat foundry revenue ($2.80 Trillion KRW in 2Q2015 vs $2.86 Trillion KRW in 2Q2014) doesn't make sense to me. Please share your thoughts. Thanks.
What a difference the brand image makes in sales and profits for cell phone companies. Apple has this absolute glow about it, and customers are quite loyal to that brand, even though they pay 2X more compared to an Android phone. I'm a loyal Samsung phone customer, but I also own Apple stock because the company performs so well in the marketplace.
I'd like to see Samsung grow in their profits and revenues of smart phones because competition produces a better smart phone for me and other consumers.
So my question is with all the Samsung Exynos insourcing and rumored several Samsung foundry customers wins, this almost flat foundry revenue ($2.80 Trillion KRW in 2Q2015 vs $2.86 Trillion KRW in 2Q2014) doesn't make sense to me. Please share your thoughts. Thanks.
The tepid sale of Galaxy S6 reflects in semiconductor division as well, Galaxy S6 and S6 Edge used Exynos. Memory has been the strength of Samsung foundry and that has shown solid growth. The question remains on processors for other than Samsung Smartphone itself as a customer.
The tepid sale of Galaxy S6 reflects in semiconductor division as well, Galaxy S6 and S6 Edge used Exynos. Memory has been the strength of Samsung foundry and that has shown solid growth. The question remains on processors for other than Samsung Smartphone itself as a customer.
I understand the GS6 sales issues. But such Samsung foundry flat revenue YoY for second quarter is strange. The reasons:
1. If I understand it correctly, last year GS5 were mostly using Qualcomm's chips made by TSMC. This year GS6 are using Samsung own Exynos made by Samsung foundry. The added revenue should be very significant.
2. Last year Samsung foundry lost Apple's A8 deal to TSMC. So their 2Q2014 is a low bar to compare with when we analyze 2Q2015 Samsung foundry revenue. A flat revenue YoY for the second quarter doesn't make sense.
3. Added to the puzzle is this year Samsung foundry (rumored) started producing majority of new Apple's A9 processors for the September new iPhone launches. Combined with the above #2 consideration, the 2Q2015 Samsung foundry revenue should have a big increase, not such flat!
Very valid points, it's really puzzling. Does that mean what we heard about A9 is very different from actual? Also if we consider #1 and #2, that would mean actual decline in Foundry revenue somewhere else other than memory. Anyone with more clue on this?
Even though Samsung lost the A8, There was still A7 business going into the 5 and various iPad models. At its peak, found art was doing 3.9 so it was already down to 2.9 by Q2 2014 and then way down to 2.0 as the exynos started to replace dwindling A7. What is noticeable is that internal sales have gone from 5.2 in Q2 2014 to 6.6 in Q2 2015. This probably indicates the quantum of internal exynos shipments.
Even though Samsung lost the A8, There was still A7 business going into the 5 and various iPad models. At its peak, found art was doing 3.9 so it was already down to 2.9 by Q2 2014 and then way down to 2.0 as the exynos started to replace dwindling A7. What is noticeable is that internal sales have gone from 5.2 in Q2 2014 to 6.6 in Q2 2015. This probably indicates the quantum of internal exynos shipments.
Yes, you pointed out the exact problem the strange foundry revenue number Samsung reported for 2Q2015. Like you said in 2Q2014 the Apple A7 order was dwindling and Exynos had not come to significant volume yet because most Galaxy were using Qualcomm's chips back then.
2Q2014 was a bad quarter.
Let's fast forward to 2Q2015, Samsung got majority Apple A9 orders and working hard to make enough A9 for the September iPhone launches. In addition to that, all Galaxy S6 models are now using Exynos made by Samsung Foundry.
So can we say 2Q2015 is a good quarter for Samsung Foundry?
But how can a good quarter 2Q2015 revenue ($2.80 Trillion KRW) can only barely match a bad quarter 2Q2014 revenue($2.86 Trillion KRW)?
What is noticeable is that internal sales have gone from 5.2 in Q2 2014 to 6.6 in Q2 2015. This probably indicates the quantum of internal exynos shipments.
The internal sales is calculated by comparing the sum.of divisional sales with the consolidated sales with the difference being the internal inter divisional sales that are reversed out on consolidation.
As for the reason that Q2 foundry sales look low there may be two scenarios. Firstly that Samsung didn't all the A9 iphone business. Or secondly and more interestingly Samsung did get the A9 business but Apple has reduced its order size for some reason.
The internal sales is calculated by comparing the sum.of divisional sales with the consolidated sales with the difference being the internal inter divisional sales that are reversed out on consolidation.
If we use this way to estimate Samsung's inter segment transactions, then I'd say the Exynos is just one of the product Samsung procured internally. Samsung Display Panels division sells a lot displays to Samsung Consumer Electronic division and Mobile Phone division. Memory Division also sells huge amount memory to Samsung's Mobile Phone division. It's really hard to guess the increased internal sales is coming from which division or product unless Samsung is willing to share the fact.
If we use this way to estimate Samsung's inter segment transactions, then I'd say the Exynos is just one of the product Samsung procured internally. Samsung Display Panels division sells a lot displays to Samsung Consumer Electronic division and Mobile Phone division. Memory Division also sells huge amount memory to Samsung's Mobile Phone division. It's really hard to guess the increased internal sales is coming from which division or product unless Samsung is willing to share the fact.
Well Samsung has always supplied memory and screens to its mobile phone division, as well as display panels to its TV division. Given that neither TV or smartphones are moving any more in volume than a year ago (and possible less), then iany increase has to come from new categories been sold internally (unless you assume a pricing increase, which is also unlikely).
1.4trn won = $1.2bn. At a $30 internal price that would be 40m units, which seems reasonable enough to me.
Good point. As far as I can tell there are several new things:
1. New 2560x1440 pixel (577 Pixels per inch) Quad HD Super AMOLED Gorilla Glass 4
2. New curved screen for the GS6 Edge model. Some news outlets reported that this type of screen is much more difficult to produce.
3. 3 GB LPDDR4 for GS6 (2 GB LPDDR3 RAM for GS5).
4. Exynos SoCs.
Above we are just talking about some new items related to Samsung Mobile Phones and haven't touched other Samsung divisions and their inter segments transactions yet.
What I'm trying to point out is:
1. Without Samsung giving specific details, it's almost impossible to guess what the composition of those inter segments revenue coming from. In the global scale, many companies have their own unique strategies to manage (or "manipulate") such internal transactions in order to achieve whatever goals they want to achieve.
2. There are some issues behind this Samsung Foundry flat 2Q2014 to 2Q2015 revenue growth. The inter segment transaction volume or the consolidated earning report doesn't undermine the fact of that Samsung Foundry YoY flat revenue growth. I hope some investment analysts can dig into this further.
I would agree to this, it's very hard to analyze Samsung numbers for each of their businesses unless they report them separately. It's such a large conglomerate in foundry, consumer durable, smartphone, memory, and many others at least I wonder when I learn about them sometimes.
Samsung is in desperate mode to snatch Smartphone market share from Apple.
It introduced free (to be precise at $1) 30 days trial of Galaxy handsets for iPhone users.
Here is a report. Can Samsung win back?
We can guess that it is likely exynos related as in the prior year Samsung mobile was sourcing screens and memory internally. Hence the change is likely to be the fact that they are also sourcing exynos. In fact given the lower volume in Q2 2015, there is probably a fall in internal sales relating to screens and memory.
Maybe the answer to all this is that Samsung hadn't got the A9
Samsung is in desperate mode to snatch Smartphone market share from Apple.
It introduced free (to be precise at $1) 30 days trial of Galaxy handsets for iPhone users.
Here is a report. Can Samsung win back?
Switching an iPhone user to Samsung is quite a noble marketing goal, and they certainly have reduced the anxiety by offering a 30 day free trial, so I'd be very curious on how successful this campaign actually is.
My behavior is to upgrade smart phones every two years as my contract gets renewed, although the popular plan now is to pay for your phone monthly instead of having a two year contract. I prefer the two year contract because it provides me with the lowest cost of ownership. Those monthly plans end up costing you $800 for a smart phone, which is about $700 too much for my frugal budget.
