New Business Development
According to DRAM eXchange, the global LCD TV shipments are expected to show a zero increase this year while those of PCs, laptops and table PCs are estimated to decrease by 4%, 3% and 7% from a year ago, respectively. Under the circumstances, Samsung Electronics’ operating profits for the first quarter of this year are predicted to fall 13% in the semiconductor sector and 63% in the consumer electronics sector compared to the previous quarter. Its display division’s profits are likely to decline as well.
At the same time, Samsung Electronics’ profitability is forecast to deteriorate as Chinese manufacturers are supplying products at lower prices. Its semiconductor division’s operating profit ratio is predicted to fall from 28.7% to 20.3% between the first quarter of last year and that of this year while those of the display and wireless device divisions drop from 7.6% to -4.9% and from 10.6% to 10.0% during the same period.
Fortunately for the company, though, the shipments of the Galaxy S7 are estimated to reach nine million units, much larger than previous expectations at 5.5 million units, in the first quarter of 2016. The initial order for supply to distributors is about 1.5 times that of the previous model Galaxy S6 although the final sales volume has yet to be seen. For the Galaxy S4, S5 and S6, the actual sales volumes during the second to fourth quarters were less than expected.
According to financial data provider FnGuide, South Korean securities firms are estimating Samsung Electronics’ operating profits for the first quarter of 2016 at 5.1777 trillion won, 14.72% less than their estimates at the beginning of this year and 13.41% less than the figure for the first quarter of 2015. Some of them advised investors not to invest in its stock for the time being.
With the situation as described above, Samsung Electronics is working on new businesses such as automotive electronic component manufacturing, virtual reality and artificial intelligence (AI). It is coming up with a series of new products when it comes to the first two while planning to expand its AI business by aggressive M&A.