Chennai: Samsung Electronics flagged its first quarterly profit drop in two years and painted a grim outlook owing to mounting competition from Chinese smartphone makers and declining chip prices.
The news comes after Apple last week sent a shockwave through world markets by slashing its revenue forecast citing the trade war and weak sales in China as the reasons.
The smartphone maker cited “lacklustre demand in the memory business and intensifying competition in the smartphone business” for the dismal outlook.
“Memory earnings fell significantly…due to weaker-than-expected demand amid inventory adjustments at data centre customers,” which led to a ‘greater-than-expected’ drop in chip prices, it said, adding, “We expect earnings to remain subdued in the first quarter of 2019 due to difficult conditions for the memory business but strengthen in the second half.”
In recent years, Samsung has enjoyed record profits by selling its smartphones and memory chips despite setbacks like jailing of its de facto chief.
Although profits have dipped, operating profits on the other hand was expected to be around 10.8 trillion won ($9.8 billion), down 28.7 per cent from a year earlier for the October to December period last year, Samsung said in an earnings estimate.
The figure was below market consensus of about 13.5 trillion won, according to market researcher FnGuide. Sales dropped more than 10 per cent to 59 trillion won in the period, Samsung said.