Samsung Reports Steep Profit Drop Amid Slumping Chip and Smartphone Demand
Samsung Electronics experiences its largest quarterly profit decline in two years due to sluggish semiconductor and smartphone sales. The tech giant anticipates a continued downturn through the first half of 2019 before a potential recovery in the second half.
Samsung Electronics reports its largest quarterly profit decline in two years as slower-than-expected demand for semiconductors hurts its bottom line. The company records a fourth-quarter operating profit of 10.8 trillion won, representing a 28.7 percent decrease from the same period last year, while revenue falls 10.2 percent year over year to 59.27 trillion won.
The Galaxy maker's semiconductor unit sees operating profit drop from 10.8 trillion won to 7.8 trillion won, and its mobile unit also suffers a significant decline. Global smartphone sales slow down, especially in China, and longer upgrade cycles negatively impact both Samsung's smartphone sales and its chip business as data center companies and smartphone makers adjust their inventory levels.
Samsung expects annual earnings to decline overall because of continuing weak demand for memory chips during the first half of the year. However, the company remains optimistic about the last two quarters of 2019, forecasting that demand for memory products and OLED panels will improve as customers complete their inventory adjustments and seasonal demand returns.