Samsung Electronics warned of weaker earnings in 2019 as it posted a 29 per cent drop in fourth-quarter (Q4) operating profit on Thursday, hit by a slowdown in demand for memory chips.
The global market leader in computer chips and smartphones said it expected “overall annual earnings to decline” this year, although sales of memory products would begin to revive in the second half, according to a Reuters report.
Uncertainties over US-China trade tensions and China’s sluggish economy bode ill for global electronics makers in 2019, pressuring demand for memory chips, smartphones and display panels, analysts say.
But some investors are hoping for a recovery for Samsung in the second half, fuelled by chip sales to data centres, the rollout of 5G wireless technology, and the launch of new gadgets including its long-promised, high-end foldable smartphone.
“If Samsung’s foldable smartphone becomes a hit, it will be a good factor for Samsung’s shares,” Park Jung-hoon, a fund manager at HDC Asset Management which holds Samsung Electronics stock, told Reuters news agency.
Samsung said operating profit was 10.8 trillion won ($9.7 billion) in the fourth quarter, in line with its estimates earlier this month. Revenue fell 10 per cent to 59.3 trillion won.
Samsung stock fell 0.2 per cent after the result on Thursday, in a flat broader market. The shares lost 24 per cent last year amid investor fears over the impact of the US-China trade conflict.
The South Korean firm’s chips power the handsets of most major smartphone makers, including Apple and China’s market leader, Huawei Technologies Co Ltd. Its memory and processor chips account for about 72 per cent of overall profit.
