Samsung 4Q profit suffers from declining chip sales

Samsung 4Q profit suffers from declining chip sales

Preliminary figure for operating profit was 75.3 billion won (67 million US dollars) in the October-December quarter, down 79.5 percent from a year earlier.

Samsung Electronics on Tuesday warned of a almost 30 percent slide in operating profit for the final quarter of 2018, citing tough memory chip and mobile phone markets. 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.

Sales fell 10.6 percent on-year to 59 trillion won over the cited period, the company said.

The company will disclose detailed earnings later in January.

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Apple's shares sank 10 per cent and sent shockwaves through the tech industry and global markets, as they struggle to price the threat of China's slowing economy. Compounding that challenge is weakness at Apple, a major customer of components; the iPhone maker stunned global markets last week when it cut its sales outlook for the first time in nearly two decades.

Samsung wrote it expected its issues with the memory business to subside by the second half of the year, CNBC wrote, and it will try to regain ground in the smartphone market with new products like a "bendable" phone and gear designed for next-generation telecommunications networks.

Revenue likely fell 7 percent to 15.8 trillion won, LG said in a regulatory filing, versus analysts' 16.3 trillion won estimate. Samsung did not provide net income, which it is to do later this month when it releases final results. Apple receives memory chips and smartphone screens from Samsung and is the South Korean manufacturer's biggest customer, according to data compiled by Bloomberg. In October, the company said there was strong demand for its memory chips, although it had previously noted the slowdown for smartphones. However, it does anticipate a slight rebound in the second half of the year as memory chip demand rises.

Later on Tuesday, domestic peer LG Electronics Inc also flagged a drop in quarterly profit, with analysts pointing to increased marketing spending on smartphones as well as worse-than-expected sales of home appliances such as refrigerators in regions including China. Whether or not it's for precisely the same reasons is unclear, but it seems a plateauing smartphone market is at least partially to blame for all three companies' guidance misses.

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