Economy

Samsung flags profit slump as Chinese rivals rise

Samsung flags profit slump as Chinese rivals rise”

The decline led to a decline in prices, and sales, leading to the decline in profits for Samsung.

Samsung once also had a 20 percent market share in China but has seen its sales tumble to less than one percent of the world's largest smartphone market in the third quarter, and last month announced the closure of its factory in Tianjin.

Samsung will disclose detailed earnings later in January.

Samsung Electronics on Tuesday said it expects its quarterly operating profit to fall almost 29 percent lower than the year-ago period, just one week after Apple rocked markets with its lower-than-expected revenue for the critical holiday sales period.

Samsung's memory and processor chips, which account for over three-quarters of its earnings and about 38 percent of sales, power smartphones including those from China's biggest handset maker Huawei Technologies Co.

Deteriorating relations between the USA and China - Samsung's two biggest export destinations - has hit demand for memory used in everything from personal computers to mobile devices, raising the pressure on a company struggling to revitalize its smartphone business.

The news battered world equities, with observers saying problems at the usually reliable US titan could point to broader demand weakness and the China-US trade war cited as a key factor.

Turns out Apple is not the only company expecting to disappoint investors with its next set of quarterly results - Samsung and LG are in the same boat.

"You see, Apple's iPhones are already losing sales in China".

Its memory-chip shipments fell 10 percent on an average in the fourth quarter, according to brokerage Eugene Investment & Securities. "Global key customers stopped to order server DRAM temporarily, expecting an additional price decline".

In a short press release, Samsung said the expected consolidated sales are approximately KRW59 trillion, while the operating profit should be around KRW10.8 trillion.

Prices of NAND flash memory chips, which hold data permanently, slipped 15 per cent.

"We expect earnings to remain subdued in the first quarter of 2019 due to hard conditions for the memory business", the South Korean tech giant said in a statement.

DRAMeXchange anticipates memory chip prices to fall 10 percent on an average in the first quarter of 2019.



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