Samsung warns of Q4 profit drop amid weak chip demand

January 08, 2019 09:37
Samsung's profit warning will add to the investor worries about the tech sector and slowing Chinese demand. Photo: Reuters

Samsung Electronics on Tuesday warned of a nearly 30 percent slide in operating profit for the final quarter of 2018, citing tough memory chip and mobile phone markets.

In a regulatory filing, the South Korean tech giant projected fourth-quarter operating profit at 10.8 trillion won (US$9.67 billion), down 29 percent from the same period a year earlier, Reuters reports.

It marks the first such profit decline in two years, according to the report.

As for revenue, Samsung predicted an 11 percent on-year slide, at 59 trillion won, for the October-December quarter.

The company does not usually explain the details behind its estimates, but on Tuesday issued a background statement along with its fourth-quarter earnings guidance to “ease confusion” among investors, the report said.

“We expect earnings to remain subdued in the first quarter of 2019 due to difficult conditions for the memory business,” Samsung said in its filing.

The company will disclose detailed earnings later in January.

Analysts expect Samsung's profit to decline through 2019 as a slowing Chinese economy erodes demand for its chips and handsets.

Weaker earnings at Samsung adds to worries for investors already on edge after Apple last week lowered its quarterly sales forecast, citing poor iPhone sales in China, Reuters noted.

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