For the semiconductor industry giants, 2019 is not destined to be peaceful. On April 4th, Samsung Electronics released the preliminary financial report guidelines for the first quarter of 2019. According to preliminary guidance, Samsung Electronics’ total revenue for the first quarter is estimated to be 52 trillion won (US$45.7 billion), down about 14% year-on-year; operating profit is about 6.2 trillion won (about US$5.5 billion), down 60.4 year-on-year. %. This will also be the bottom of the profit margin of Samsung Electronics in the past 10 quarters.

It should be noted that this is not the first quarter of Samsung Electronics' profit. In the fourth quarter of 2018, the performance of Samsung Electronics also fell sharply. The net profit for the quarter was 8.46 trillion won (about 7.6 billion US dollars), down 31% from the previous month and down 36% from the same period last year.

What happened to Samsung? Semiconductor dragged down performance

Semiconductor chips are currently the core profit pillar of Samsung Electronics.

"In the third quarter of Samsung Electronics, 80% of the turnover comes from the semiconductor business unit. Flash-based solid-state drives, solid-state drives in computers are Samsung products, mobile phone memory cards, camera memory cards are also." Previously accepted the 21st century economy In an interview with the reporter, Samsung Semiconductor insiders said.

The continued slump in performance is mainly due to the decline in the performance of Samsung's memory chips, but this is not related to the weak performance of the entire chip industry, especially memory chips.

According to Gartner senior research director Deng Yajun, who analyzed the 21st Century Business Herald, Gartner has reduced the overall revenue of the semiconductor industry in 2018 from 481 billion US dollars in the third quarter data to 477 billion US dollars after the fourth quarter data release. The rate was lowered from 14.4% to 13.4%. "It is expected that the revenue growth of the entire semiconductor industry will fall from the expected 7.2% to 2.8% in 2019."

In Deng Yajun's view, the main impact of the industry's cooling is from DRAM, which accounts for about 22% of the current semiconductor market. In 2018, DRAM market revenue will drop by about $3 billion, and in 2019 it will drop by $21 billion. As a result, the semiconductor industry's year-on-year growth rate was only 2.6% in 2019. If the performance of memory chips is removed, the industry will achieve a growth rate of 4.9%.

The NAND situation is also not optimistic. Market research firm DRAMeXchange believes that the price of NAND flash memory chips in the first quarter of this year fell by 20%. Although the rate of decline will slow down in the second quarter, the trend of continued decline will not be reversed.

In addition to the decline in memory chip prices, display panel market demand is also slowing. Affected by the decline in sales of Apple's mobile phone in the Chinese market, as the main supplier of Apple's mobile phone display panel, Samsung Electronics' performance has also been weak.

On the smartphone side, Samsung has said that the Galaxy S10 is expected to boost performance, but the Galaxy S10 was released on February 20 this year. The official listing time is March 8, and the contribution to the first quarter of 2019 remains to be seen.

Some analysts believe that the bad situation of Samsung Electronics may continue until the second quarter of 2019, until the chip price decline may slow down.

Looking forward to 5G ?

Despite the poor performance of the memory chip and its strong cyclicality, some insiders believe that analyzing the true future of Samsung Electronics should focus on 5G technology.

Deutsche Bank analyst Han Chengxun judged that the launch of 5G network, the user's payment and the sales of 5G smart phones will become a major focus in the future. Samsung has previously announced that it will invest 18 billion US dollars in emerging technologies such as 5G and AI.

Such an investment has begun to bear fruit. Recently, Samsung released a number of mobile phone 5G chips, and said that the chip has begun mass production. In addition to the previously introduced Exynos Modem 5100, Samsung also introduced the new single-chip RF transceiver Exynos RF5500 and the modulator solution Exynos SM5800.

In addition to the 5G chip, Samsung 5G mobile phone has also officially debuted. Samsung has launched the Galaxy S10 5G mobile phone in South Korea, and users can connect to the 5G network early adopters, and the mobile phone will also be launched globally. It is understood that Samsung will cooperate with US telecom operator Verizon to launch the first Galaxy S10 5G mobile phone in the US market.

"Compared with competitors, Samsung is expected to be in a favorable position in the 5G product line, because the new Apple mobile phone may not have a 5G model in the second half of 2019." Han Chengxun said. Compared with its main competitors, the Samsung 5G mobile phone is expected to seize the smartphone market share in the future.

Of course, there is a big wave of 5G smartphones that are also on the way to the battlefield. At this year's MWC, domestic brands such as Huawei, ZTE, and Xiaomi all showed their own 5G mobile phone products. However, at least in the current two positions in South Korea and the United States, the competitive pressure of Samsung 5G mobile phones is still relatively small.

In addition, Samsung has ambitions on 5G devices, which set a goal for itself: 20% of the global 5G device market in 2022. According to market research firm IHS Markit, Samsung currently accounts for only 3% of the global 5G equipment sector, far behind Huawei's 28% share and Ericsson's 27% share.

However, considering that Huawei is facing the pressure of barriers in the international market, Samsung is stepping up its efforts to promote the development of its 5G-related business. At the shareholders meeting in February this year, Samsung said it is working hard to win equipment contracts in the Indian, Japanese and European markets.