Thursday, 20 June, 2019


Samsung, like Apple, feels sting of slowing global growth

Samsung Feels Apple's Pain as Technology Slowdown Hits Sales Samsung Feels Apple's Pain as Technology Slowdown Hits SalesMore
Conrad Doyle | 11 January, 2019, 08:13

Samsung expects its quarterly operating profit to fall 29 per cent compared with a year ago, adding to the tech sector's unease about the effect of slowing global economic growth on the industry.

Preliminary figure for operating profit was 10.8 trillion won (9.6 billion US dollars) in the October-December quarter, down 28.7 percent from a year earlier.

After Apple, Samsung today reported that it likely won't be able to reach the originally estimated profit for Q4 ending on December 31st 2018. The corporation blamed the decline mainly on poor demand in its memory chip business, as well as heightened competition in the smartphone market.

Sales also dropped by more than 10 per cent to 59 trillion won during the same period.

One factor behind troubles at the company is the lower sales projections from Apple, a major Samsung memory and smartphone screen buyer-for which a wide variety of explanations have been proposed including the ongoing U.S.

The firm had seen earnings surge in recent years largely due to strong appetite for memory chips in mobile devices.

The warning from the South Korean company added to concerns about the wider tech sector after Apple last week shook world markets when it said it was set to miss its latest revenue target thanks to a slowdown in China.

The figure was below market consensus of about 13.5 trillion won, according to market researcher FnGuide. Apple receives memory chips and smartphone screens from Samsung and is the South Korean manufacturer's biggest customer, according to data compiled by Bloomberg. Samsung didn't provide net income, which it will do later this month when it releases final results.

"Second- and third-tier Chinese smartphone makers saw drastic drops in their sales, which also took a toll on chip demand", said analyst Kim Young-woo analyst at SK Securities.

Analysts expect Samsung's profit to decline through 2019 as weakness in China persists, Refinitiv data showed. Speaking of Huawei, it's aggressively trying to displace Samsung as the top global smartphone maker, perhaps as soon as this year. Profitability will recover in the second half, the company predicted, on projected improvements in the market, with rising adoption of new CPUs and launches of new smartphone products. DRAM pricing is expected to continue falling in early 2019 which will continue to lower expectations for Samsung's semiconductor division for what is expected to be the first half of 2019.

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