On Tuesday, Samsung stated an estimate of 29 percent fall in its profit for the last quarter, which left the market surprised.
In its rare commentary to clear the confusion among investors who are already worried of slow paced growth of technology firms globally, Samsung for its likely lowered profits blamed the weak demand of memory chips. The Korean technology firm also hinted lower profit for the first quarter because of more competition in memory chip market with its expectation of the market to be improving in second half by the time when many of the companies will be releasing new smartphones.
Last week Apple, referring lower iPhone sales in China, in a rare move cut its sales forecast which made the investors worried about and now Samsung’s weaker earnings statement will be adding to it.
In this time of slower economy, exacerbated by trade war between America and China, mobile phone demand is dropping across the tech sector including China, which has the world’s biggest market of smartphones. In global markets, business share of Samsung has also dropped to 0.9 percent which was 18.2 percent in 2013, all because of growing trend of countries supporting their local players.
But Samsung is still successful to be providing chips to most of the major smartphone makers including Apple and Chinese market leader Huawei, Sales of its processor and memory chips make 38 percent of the total sales of Samsung which adds about 75 percent to its overall profit.
Samsung is in a habit to release earnings estimate prior to post detailed results with due elaboration at the end of every month, but after the end of previous quarter which concluded recently, it has issued a commentary for dropped profits on mobile phones as its first after its previous commentary in late 2014.