Samsung’s Profit Continues To Slide As Its Smartphone Unit Struggles

As the company forecasted earlier this month, Samsung Electronic posted yet another drop in its quarterly profits.

This marks its seventh quarterly decline in a row as the company’s smartphone unit struggles to keep up with competitors like Xiaomi. Sales of its flagship Galaxy S6 and S6 Edge also failed to live up to expectations, and the company is reportedly planning price cuts for the series.

Samsung’s net profit dropped to 5.75 trillion won ($4.9 billion) in the second quarter, a decline of eight percent from the 6.25 trillion won it posted a year ago. Its mobile phone unit’s operating profit plummeted 37.6 percent year-over-year to 2.76 trillion won. The company’s operating profit margin in the last quarter was 10.6 percent, a significant decrease from 15.5 percent in Q2 2014.

Once again, Samsung’s revenue was eaten into by competition from Chinese companies like Xiaomi, which pushed out Samsung as China’s top smartphone maker in 2014. Apple’s iPhone 6 Plus also continues to snatch market share away from Samsung’s phablets.

A new headache this quarter was a shortage in supplies of curved screens used in the Galaxy S6 Edge, which meant Samsung was not able to meet demand for the well-received phone.

Samsung Electronic’s semiconductor unit, which also makes chips for other smartphone makers like Apple, fared better. Its second quarter profit increased to 3.4 trillion won from 1.86 trillion won a year earlier. The increase was thanks to Samsung’s smartphone unit switching to the company’s own chips instead of ordering from other suppliers like Qualcomm. The unit is also believed to have scored orders for the main processors in the next iPhone.

Its consumer electronics division, which makes televisions, fridges, and other home appliances, made a 210 billion won profit, down from 770 billion won a year ago. This was due in large part to a rise in the South Korean won, which made exported products much more expensive in Europe and the U.S.