Samsung Electronics shocked the world market on Tuesday January 8th by announcing its first quarterly profit drop in two years, blaming it on the growing competition from Chinese smartphone makers and declining chip prices, AFP has reported.
The South Korean giant's warning added to concerns about the broader tech sector after Apple sent shudders through world markets last week by slashing its revenue forecast, blaming weak sales in China and citing the trade war.
Samsung, the world's top maker of smartphones and memory chips, has enjoyed record profits in recent years despite a series of setbacks.
But operating profit during the last October to December period was expected to be around 10.8 trillion won ($9.8 billion). However, this figure was below market consensus of about 13.5 trillion won, according to market researcher FnGuide.
Sales dropped more than 10% to 59 trillion won in the period, Samsung said.
It cited "lacklustre demand in the memory business and intensifying competition in the smartphone business" for the dismal outlook.
"Memory earnings fell significantly... due to weaker-than-expected demand amid inventory adjustments at data-centre customers," which led to a "greater-than-expected" drop in chip prices, it said.
"We expect earnings to remain subdued in the first quarter of 2019 due to difficult conditions for the memory business but strengthen in the second half."