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Samsung's profits have dropped by nearly 30 per cent amid China slowdown

Samsung's profits have dropped by nearly 30 per cent amid China slowdown

But the final quarter saw the smartphone maker miss analysts' expectations and brought its first quarterly decline in profits in two years.

Samsung said the company generated an operating profit of 10.8 trillion Korean won, which is roughly around $9.67 billion.

Meanwhile, shortly after Samsung's announcement, fellow South Korean company LG noted that its fourth quarter operating profit likely fell 80 percent from the same period a year earlier.

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.

It follows a similar warning from Apple, Samsung's chief rival in the smartphone sector, which triggered mass sell-offs after chief executive Tim Cook said that sales in China had slowed due to its ongoing trade war with the USA.

Weaker earnings at the world's biggest maker of smartphones and semiconductors adds to worries for investors already on edge after Apple Inc last week lowered its quarterly sales forecast, in a rare move, citing poor iPhone sales in China.

"Recovering demand in the first quarter can not be expected, because it is a seasonally low period and customers also know prices are coming off, so there's no rush to buy", said Sanjeev Rana, a Korea technology analyst at CLSA."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". At their earnings call overnight Samsung have announced such a drop for them. The company has reportedly experienced lower-than-demand for memory chips from its data centre customers, according to CNBC.




Shares in Samsung Electronics, the flagship subsidiary of the Samsung Group that dominates South Korea's economy, were down 0.4 percent in mid-morning trading.

It also said a "stagnant and fiercely competitive smartphone market" pressured its income and that the firm would continue to innovate its product line such as foldable and 5G models.

While Samsung still leads the world in smartphone sales, it's being squeezed by Chinese handset makers like Huawei Technologies Co.

Samsung is also set to introduce the world's first bendable smartphone in the first half.

"The most important thing from here is for the pace of decline in chip prices to slow, which I expect will happen in the second quarter".

It also took another hit after the bribery conviction of Lee Jae-yong - the son and heir of the group's ailing current Chairman Lee Kun-hee.