The fall in demand for smartphones and tougher competition in the industry is increasingly causing Samsung market leaders. The weaker demand for memory chips also affected profit in the fourth quarter of 2018. As the South Korean technology company reported on Thursday, profit fell 31 percent year-over-year to 8.46 trillion won (6.6 billion euros). For comparison, a competitor Apple earned almost $ 20 billion over the same period.
For the entire 2018, Samsung has achieved a record net profit, mainly due to the semiconductor business, which makes the company certainly the most profitable. Samsung also leads the market for memory chips and TVs.
As a result, profit amounted to 44.3 trillion won. Revenue increased in 2018 to a historic high of 243.77 trillion won. "In 2019, the company expects that the annual result will decline due to a weaker business in the field of data storage," – said in a statement. However, the demand for memory chips and organic light-emitting diode (OLED) displays is likely to increase in the second half of the year.
In the last quarter of 2018, Samsung's revenue fell 10 percent across the company to 59.3 trillion won. Operating profit fell 28.7 percent year on year to 10.8 trillion won.
The need for memory chips should remain weak in the first quarter of this year, the company said in a statement. In addition to seasonal factors, this is also associated with “macroeconomic uncertainty” and a reduction in customer inventories. On the contrary, Apple’s IT and mobile rival expects revenue to improve, despite declining smartphone sales.
Hope for Galaxy S10
Among other things, the South Koreans are hoping for the launch of a new state-of-the-art Galaxy S10, which will be launched in February, as well as the launch of a commercial 5G service in South Korea. First of all, the new mobile standard provides a higher data transfer rate. "Samsung will unveil the Galaxy S10 … in San Francisco next month, and the new flagship smartphone model is expected to boost sales and business in the coming months."
IDC market research experts suggest that difficult market conditions will continue in the first quarter of 2019. It will also make "the probability of a decline in the market this year more and more real." Suppliers shipped 375.4 million smartphones in the past quarter, down 4.9 percent from a year earlier, and a consistent decline in the fifth quarter.
Overall, market experts estimate that Apple sold between 66 and almost 72 million smartphones during the Christmas season. Estimates for Samsung are over 70 million. Both companies are also increasingly experiencing competition from China.
Most recently, Samsung manager Mario Winter, however, showed confidence in the smartphone segment: above all, the business with premium devices is still growing in double digits, Winter said. It will also be difficult for manufacturers to distinguish their products from those of their competitors.
(AP / DPA)