Even Samsung expects profits to drop this year due to flagship fatigue

• Samsung released its first-quarter results and posted record operating profits.
• These profits came in part due to the success of its semiconductor business and the launch of the Galaxy S9.
• Samsung expects earning growth to decline going forward, anticipating weak demand for its flagship phones.

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Samsung released its first-quarter results earlier today and posted both a 20 percent increase in year-on-year revenue and record operating profits. Consolidated revenue came in at $56.1 billion (60.56 trillion won), while profits stood at $14.49 billion (15.64 trillion won). This is the sixth quarter in a row that Samsung has managed to increase its operating profits.

The figures were mainly driven by the company's semiconductor business, the release of the Galaxy S9 and S9 Plus, and "strong demand for chips used for smartphones and crypto-currency mining." The continued success of the Galaxy S8 also contributed.

While we don't have any official sales figures for the Galaxy S9, a recent report by Canalys suggests that the company shipped over 8 million S9 and S9 Plus devices in the four weeks after its launch. This is similar to the number of Galaxy S8 devices that were sold in the four weeks after its release, although less than the 9 million sales that Galaxy S7 devices recorded.

Can Samsung's record-breaking success continue?

However, there are signs of challenges ahead, specifically relating to an anticipated decline in the profitability of its mobile business "due to stagnant sales of flagship models amid weak demand and an increase in marketing expenses." In addition, Samsung also noted that "rising competition in the high-end segment" could also become a factor.

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Looking ahead to the second half of the year, Samsung says that the upcoming release of a new flagship model, presumably the Galaxy Note 9, should also help strengthen sales. It will also introduce new models that are optimized for specific markets. Meanwhile, Bixby's expansion will continue as Samsung looks to expand the scope of its digital assistant.

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