Slowdown in China is also impacting Samsung

Slowdown in China is also impacting Samsung
For the first time in two years, Samsung is expected to report a drop in quarterly operating profits when the company reports its fiscal fourth quarter results on January 8th. According to Reuters, data from the Institutional Brokers' Estimate System (IBES) shows that Samsung is expected to announce a 12% drop in year-over-year operating profits to the equivalent of $11.85 billion USD. Revenue will be 5% lower due to lower shipments of memory chips.

Like Apple, which announced last week that it was lowering its revenue guidance for the fiscal first quarter that ended last month, Samsung is being hurt by poor economic conditions in China. Samsung's smartphone operating profits are believed to have slipped by 20% during the quarter, compared to the same three month period last year. Samsung has only a 1% share of the Chinese smartphone market compared to Apple's 9%. But unlike Apple, Samsung is affected by lower sales of its processor and memory chips to Chinese smartphone manufacturers. These components make up more than 75% of Samsung's earnings and 38% of its revenue.


The decline in Samsung's chip business is expected to drop operating profits in that division by 3.7% during the fiscal fourth quarter to the equivalent of $9.4 billion USD. Shipments of the company's memory chips are believed to have dropped by 10% during the three month period.

China's economy is being affected by the current trade war with the U.S. Certain exports from China are being taxed, raising their prices in the states and dampening demand for these products.

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8 Comments

1. Vogue1985

Posts: 442; Member since: Jan 24, 2017

Not surprised

2. japkoslav

Posts: 1496; Member since: Feb 19, 2017

Don't be surprised the next day - Apple had an article, Samsung done, what the next big phone company? Xiaomi? "Slowdown in China is also also also impacting Xiaomi"

3. muhk121

Posts: 6; Member since: Jul 19, 2018

Why is huawei and other Chinese companies don’t have any impacts

4. mootu

Posts: 1495; Member since: Mar 16, 2017

It tends to be OEM's with the highest priced phones being hit quiet hard. Chinese phones are sold for very reasonable prices in China.

5. adecvat

Posts: 638; Member since: Nov 15, 2013

Because they are Chinese.

6. muhk121

Posts: 6; Member since: Jul 19, 2018

Than we shouldn’t complain about China’s slow down instead it’s the higher price with nothing new in every year new smartphone. And why do companies like apple and Samsung only think about year on year increase instead sometimes you can get less look yourself 10 to 20 years back and now . So they should stop crying.

7. Peaceboy

Posts: 640; Member since: Oct 11, 2018

RIP Samsung! Next year, no more marketshare. Low and mid tier goes to chinese phones and high end is of course to apple.

8. maxdroid

Posts: 9; Member since: Dec 29, 2018

Samsung is losing market in the low-cost phone market. Therefore, the decline in revenue is natural.

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