Samsung Electronics Co. Ltd. saw its profits decline for the first time in seven quarters following disappointing sales of its flagship smartphones.

However, the company said Monday that strong semiconductor sales and higher prices for its display panels should drive new record-breaking earnings in the next quarter.

Samsung’s second-quarter earnings report reveals its operating profit fell almost 5 percent, to 14.9 trillion won ($13.3 billion), with revenue down 3 percent, to 58.5 trillion won. Operating profits rose 5.7 percent year-over-year, but revenue fell 4 percent.

The somewhat disappointing earnings, more or less in line with guidance issued by the company earlier this month, and bring to an end an impressive streak of results that began in the fourth quarter of 2016. Samsung previously posted seven successive quarters of profit growth, fueled by high demand and prices within its lucrative memory chip business.

The company’s semiconductor unit is still its biggest cash cow, but profit growth has stabilized in 2018. The unit generated 11.6 trillion won in profits, about 80 percent of its total income.

The disappointment was greater in Samsung’s information technology and communications business, which includes its smartphones. The unit saw operating profit fall by 29 percent due to underwhelming sales of its latest flagship smartphone, the Galaxy S9.

Analysts also noted Samsung’s ongoing failure in China, where it previously owned a double-digit share of the market. The company now accounts for just 1 percent of Chinese smartphone sales, down from 3 percent a year ago, according to data from Counterpoint Technology Market Research.

In response to this pressure, Samsung is said to be planning a possible game-changer in the shape of the world’s first foldable smartphone, due for release early next year. That device, which is expected to be called the Galaxy X, is based on new organic light-emitting diode technology that substitutes glass with a flexible plastic cover that enables the screen to bend and curve while still shielding it from harm.

The launch of the new device can’t come soon enough for Samsung, because it also said its profits were hurt by low demand for its flexible OLED panels and reduced prices for its LCD panels. However, the company reckons demand for its flexible OLED technology will improve in the second half of this year.

“Looking ahead, Samsung expects sustained strength in the memory market and growing demand for flexible OLED panels to drive earnings higher in the second half,” the company said.

Analysts were optimistic about Samsung’s future prospects too. Holger Mueller of Constellation Research Inc. said the company had delivered an excellent quarter considering that its leadership is still in transition, especially when one considers that its previous, stronger quarters were more of a positive surprise. “The product mix keeps delivering for Samsung,” he added.

Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, said that even though profits fell slightly, Samsung did well overall on the back of OLED displays, memory and storage components. He also thinks Samsung could have a three-generation lead over its rival Apple Inc.’s iPhone when it comes to 5G technology, something that would also help its cause going forward.

“The S9 was a strong phone, but its industrial design was very close to the S8, which I think impacted phone sales,” Moorhead said. “I am expecting the company to pick up ground with the Note9 and the S10.”

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