The Samsung Electronics warned of a 60 percent-plus plunge in first-quarter operating profits Friday, in the face of a weakening chip market.
Operating profits for January to March would be “approximately 6.2 trillion won”, the firm said in a statement, down 60.4 percent on the same period last year.Sales were about 52 trillion won, it said — 14 percent lower.
The firm is the flagship subsidiary of the giant Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in the world’s 11th-largest economy, and it is crucial to South Korea’s economic health.
It has enjoyed record profits in recent years despite a series of setbacks, including a humiliating recall and the jailing of its defacto chief.
But now the picture has changed, with chip prices falling as global supply increases and demand weakens.
Samsung Electronics warned investors last week to expect weak operating profits, citing “un favourable market conditions” for displays and memory chips.”Amid weak demand for memory business, a drop in price for signature products is expected,” it said then.
“The company will seek to improve cost competitiveness through effective resource management,” it added, “while enhancing product quality in the short term”.
Samsung was also launching its top-end S10 5G smartphone Friday, after South Korea this week won the global race to commercially launch the world’s first nationwide 5G networks.
But the company has to contend with increasingly tough competition in the smartphone market from Chinese rivals like Huawei — which in 2017 surpassed Apple to take second place — offering quality devices at lower prices.