Samsung has released a surprising profit warning, slowing down the price of memory chip and the demand for the display panel. It is the latest indication that between the global economic downturn, technology companies are facing tough times.
Two months after the warning from South Korean Technology Company, Apple has surprised investors with its first profit warning since 2002, citing “magnitude” of economic slowdown in China.
A few days later, Samsung, the world’s largest chip and smartphone maker, has estimated the first decline in quarterly operating profit in two years. It blamed “increasing macro uncertainties” for the sale of weak chips and smartphones in the fourth quarter of 2018.
The market is tough and on Tuesday, Samsung, which is heavily dependent on computer chips, said that in its first quarter, the profit forecast will be missed. “The company expects that the scope of price decline in main memory chip products will be larger than expected.”
Analysts warn of the impact of China-China trade tension on China’s economic downturn and global electronics companies. Sales of weaker smartphones and less orders from data-centric companies like Amazon and Google have created a glow of memory chips and have sent slipping prices.
Samsung has also been killed due to the poor demand of Apple’s iPhone, for which it supplies the display panel and chips. It is competitive in the Apple smartphone, but Samsung is also the largest customer.
Apple had said in January that weak iPhone sales and Chinese recession have reduced their revenue from 4.5% to $ 84.3bn (£ 63.7bn) from December 3 to December 29, one year ago. The profits fell to $ 19.97bn. Smartphone sales have also slowed down because consumers now have more time to upgrade their phones.
Li Won-Sik, an analyst at Shinong Securities, told Reuters, “Inventory is harming profitability for Samsung due to poor performance of the iPhone’s memory on its memory chip and weak display of its display panel business.
Samsung won 7.2tn between January and March (£ 4.66bn) was estimated to make operating profit, won 15.6tn less than half a year ago. Sales were expected to fall from 60.6 tons to 53.7 tien, which were won one year ago.
The company told shareholders in its annual meeting last week that the sale of memory products is likely to increase again in the second half of the year.
While both companies have blamed China’s slowness, Apple and Samsung are facing grueling competition from many rivals around the world, including Chinese firms which can match the quality of their hardware and Can produce cheap phones
Samsung has to launch a folding phone, which has been almost a decade in the making, worth $ 1,980 and it is available in America on April 26 and in Europe on May 3.
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