Samsung warns of profits dip as China slowdown bites

A man tries out a Samsung Electronics' Galaxy Note 9 at its store in Seoul South Korea Jan. 7 2019. Kim Hong-Ji Reuters

A man tries out a Samsung Electronics' Galaxy Note 9 at its store in Seoul South Korea Jan. 7 2019. Kim Hong-Ji Reuters

Marketing expenses as well as flat sales volumes have impacted Samsung's profitability.

"Depressed demand in China will further drive down Samsung's chip sales there". Its memory and processor chips account for over three-quarters of overall profit and about 38 percent of sales.

Samsung announced that it anticipates a quarterly operating profit of about $9.6 billion (10.8 trillion won), while fourth-quarter sales are anticipated to be close to $52.4 billion (between 58 and 60 trillion won). Final results and the Details will be publish Samsung until the end of January.

After Apple reported their expected drop in profits for the same period there was a large reaction in the market and this time there was also a response in the market to Samsung's report. The company has reportedly experienced lower-than-demand for memory chips from its data centre customers, according to CNBC. In October, the company said there was strong demand for its memory chips, although it had previously noted the slowdown for smartphones.

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The prices of DRAM, a type of memory used for the temporary storage in computer systems, sank 10 percent in the fourth quarter from the previous quarter due to weak demand for PCs, servers and smartphones, according to corporate tracker DRAMeXchange. The memory chip business was also hit by a drop in prices, the company said. Samsung it seems are starting to see the competition come at them hard with Huawei snapping at their heels in many markets and actually overtaking them in others. It is the first quarter is minus since the late summer of 2016, as Samsung had to take to start selling because of the inherent fire risks the former top model Galaxy Note 7 from the market. "It is not. The smartphone market is already saturated", said senior analyst Greg Roh at Hyundai Motor Securities. "That's even worse for Samsung because that would drag its chip prices down", Roh said, referring to Apple as a Samsung chip client.

Semiconductors now account for more than three-quarters of Samsung's total profit, compared with the first quarter of 2013 when its phone business represented nearly three-quarters of profit.

Samsung's shares fell 1.7 percent before in Seoul. The benchmark Kospi index ended down 0.6 percent.

Samsung's weaker earnings adds to worries for investors already on edge after U.S. tech giant Apple last week took the rare move of lowering its quarterly sales forecast, citing poor iPhone sales in China.

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