Samsung Hit by Weak Demand in Key Products as It Prepares to Launch New Galaxy Flagship Phones

The world’s greatest smartphone maker, Samsung Electronics, reported a stoop in fourth-quarter web earnings on Thursday, blaming weakening demand in key merchandise and falling chip costs. Net earnings in the October-to-December interval had been KRW 5.23 trillion¬†($4.Four billion), down 38 p.c from a yr in the past, it mentioned in a press release.

“Fourth-quarter profit dropped from a year earlier due to the continued fall in memory chip prices and weakness in display panels,” Samsung mentioned in a press release.

The agency is the flagship subsidiary of the large Samsung Group, by far the most important of the family-controlled conglomerates identified as “chaebols” that dominate enterprise in the world’s 12th-largest financial system.

But it suffered a sequence of difficulties in 2019, with the worldwide reminiscence chip market — which has pushed earnings in latest years — hit by rising provide and falling demand.

The premium smartphone market has additionally grown fiercely aggressive, with consumers ready longer earlier than upgrading to new fashions.

Samsung mentioned it expects “weak sales from seasonality in memory chips, OLED and consumer electronics” in the primary quarter of 2020 as the agency navigates “continued uncertainties in the global business environment”.

Operating revenue dropped greater than 30 p.c year-on-year to KRW 7.2 trillion, whereas gross sales in the fourth quarter stood at KRW 59.9 trillion.

For full-year 2019, the agency reported web earnings of KRW 21.7 trillion, down 51 p.c from a yr in the past.

Samsung has been strained by a commerce warfare between China and the US and caught in a diplomatic row between Seoul and Tokyo over wartime historical past, with Japan imposing powerful restrictions on exports essential to South Korean tech giants in July.

In one other shadow hanging over the agency, its vice chairman and de-facto chief Lee Jae-yong is on trial for the second time over a sprawling corruption scandal that led to the impeachment of South Korea’s former president Park Geun-hye.

A responsible verdict and lengthy jail sentence would deprive the agency of its high resolution maker.

Lee was initially jailed for 5 years in 2017 on a number of costs together with bribery, then launched after a number of of his convictions had been quashed, just for the Supreme Court in August to order a retrial.

‘Enhanced’ 5G gadgets
In the cell enterprise, robust demand for Samsung’s mid-range A-series handsets gave the agency a much-needed increase over the previous couple of quarters, mentioned Gerrit Schneemann, a senior analyst at IHS Markit.

The premium gadgets, such as the most recent Galaxy Note that was broadly out there in the fourth quarter, confronted competitors from Apple — which reported its best-ever quarter powered by the brand new iPhone 11 and iPhone 11 Pro fashions.

“A strong quarter from Apple in key markets will have had an impact on Samsung,” Schneemann instructed AFP.

In 2020, Samsung is pinning its hopes on growing availability of 5G telecom companies driving gross sales of its handsets — it’s a world chief in the expertise — and mentioned it can roll out an “enhanced” 5G lineup.

Global demand for the superfast 5G handsets in 2019 was greater than anticipated, with practically 19 million items shipped worldwide, in accordance to the most recent knowledge from market researcher Strategy Analytics.

Samsung held 36 p.c of market share, it mentioned, intently trailing Huawei, which was main the tight race with 37 p.c, though most of its shipments had been in China, the place US sanctions made comparatively much less influence.

“Samsung’s 5G smartphone shipments are international and span a wide spread of countries, from South Korea to the UK to the United States,” mentioned Ville-Petteri Ukonaho, Associate Director at Strategy Analytics.

Samsung mentioned earlier this month it had shipped greater than 6.7 million Galaxy 5G smartphone gadgets globally final yr, claiming it had greater than half the world’s 5G smartphone market as of November.

The agency is due to unveil new Galaxy gadgets subsequent month in San Francisco that it mentioned — with out providing particulars — will “shape the next decade of mobile experiences”.

Samsung shares had been down 1.1 p.c in early morning commerce in Seoul.

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