Samsung Electronics profit sharply down

Samsung Electronics is seen at its office building in Seoul

Samsung Electronics is seen at its office building in Seoul South Korea

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

After reporting a $13.27 billion profit just one year ago, Samsung has today revealed that its profits for the fourth quarter of 2018 are set to decline a whopping 29% year-on-year to just $9.67 billion. -China trade war, an associated slowdown in the Chinese economy, increasing competition in the phone market from emerging players like Huawei, and the fact that Apple products are prohibitively priced for some worldwide markets. The company also wanred that challenging business conditions in the memory chip segment would likely mean that earnings would also be below expected levels for the first quarter of 2019.

Samsung make memory and processor chips for companies including Apple and Huawei phones with these sales accounting for close to 40 percent of their overall sales. The drop in demand was partly the result of ongoing tensions between China and the United States, Samsung's two biggest markets. 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 also acknowledged that its own smartphone business is struggling in a "stagnant and fiercely competitive market", CNBC wrote. According to market research firm Counterpoint, in the third quarter, Samsung sales accounted for 1 percent of the Chinese market. The company won't release net income until it releases final results later this month.

It marks the first such profit decline in two years, according to the report. The memory chip business was also hit by a drop in prices, the company said. "In the second quarter Samsung launches the Galaxy S10 and a lot of other Android makers announce new model launches that might help smartphone demand and enhance the demand for DRAM".

Despite the deteriorating market environment, Samsung expressed confidence that its profitability would recover in the second half. 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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