Samsung set for profit fall in 2018 amid weak China sales

11 January, 2019, 08:13 | Author: Brooke Harris
  • Samsung Electronics is seen at its office building in Seoul

Samsung's shares fell as much as 2.1 percent before paring losses at midday in Seoul.

Samsung expects its quarterly operating profit to fall 29 per cent compared with previous year, adding to the tech sector's unease about the effect of slowing global economic growth on the industry. In October, the company said there was strong demand for its memory chips, although it had previously noted the slowdown for smartphones.

Samsung has a less than 1 percent share of China's smartphone market, versus 9 percent for Apple. Total sales are also down 10.6% from the year prior to $52.7 billion.

Weak sales of Smartphones, but, above all, a slump in demand for memory chips, is now the South Korean company Samsung Electronics. And the company expects the profits to remain subdued in the first quarter of 2019 as well, owing to weak seasonality in the memory market.

The company will disclose detailed earnings later in January.

Despite the slumping fourth-quarter earnings, the South Korean company's operating profit for the whole year of 2018 reached a new high of 2.7 trillion won (2.4 billion USA dollars).

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Statistics also showed that Huawei Technologies Co Ltd continued to lead China's smartphone market during the third quarter of past year, with a 23 percent market share, followed by Vivo and Oppo, which account for 21 percent respectively. Samsung it seems are starting to see the competition come at them hard with Huawei snapping at their heels in many markets and actually overtaking them in others.

Analysts expect Samsung's profit to decline through 2019 as a slowing Chinese economy erodes demand for its chips and handsets.

Samsung is also set to introduce the world's first bendable smartphone in the first half.

South Korea's semiconductor exports, dominated by Samsung Electronics and its smaller rival SK hynix, dropped 17 percent on-year to $8.86 billion in December, according to the government data. Alongside this, Samsung's profit margins also took a hit by higher marketing spending throughout the holiday season.

The 50-year-old scion was a key figure in the scandal that ousted former South Korean President Park Geun-hye following massive nationwide protests, and was sentenced to five years in jail last year.

But Lee was released from jail in February a year ago after several of his convictions were quashed on appeal.

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