Samsung follows in the footsteps of Apple, not in terms of manufacturing excellent products but sales slump in China. After Apple witnessed slow iPhone demand in China, Samsung also registered poor performance as the leading maker of semiconductors and smartphones is set to post its first drop in quarterly operating profit in two years.
It is known to all that China is a crucial market for South Korean giant, and Cupertino based Apple. Investors are already facing tough phase after Apple has seen rejection in China as the people there prefer homespun alternatives like Huawei.
Samsung to Report fall in y-o-y operating profit in China for the last quarter of 2018
Samsung is supposedly releasing its profit warning on Tuesday, i.e., today and will reveal a 12% fall in its year-on-year operating profit for the last quarter of 2018. Moreover, the company’s revenue is also expected to drop by 5%.
Tim Cook, Apple’s CEO, in his letter to investors, mentioned that increasing price is not the only reason for iPhone’s dwindling sales. In his interview with CNBC, Cook listed some reasons for the reduced sales of iPhone. One of the causes is Apple’s struggle in China, where sales of a smartphone fell around 8% last quarter.
Apart from the handset business of Samsung, the slump has affected other products of the Korean company.
Samsung’s Profit Warning
Samsung holds only 1% of the Chinese smartphone market against Apple’s staggering 9%. But one should not forget that Samsung is one of the world’s largest makers of memory chips and semiconductors.
Along with handset business, Samsung witnessed a year-on-year decrease in shipments of the chip (3.7%) and memory cards (10%) during the same quarter.
According to South China Morning Post, “Samsung, due to publish preliminary fourth-quarter results on January 8, is expected to see a 12 percent year-on-year drop in operating profit to 13.3 trillion won (US$11.85 billion) for the period, I/B/E/S data from Refinitiv shows.”
For Samsung, 2019 is going to be a bleak year as the report mentions that its profits will continue to fall during this year in spite of adjustments in memory pricing.
From the reports, it has become crystal clear that 2019 will be an unhealthy year for tech companies. Making profit from the hardware business will be a tough nut. Probably, for this reason, Apple has begun to concentrate on its Services business as it has joined hands with Samsung for iTunes Movies and TV shows.
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