Apple not the only one hit badly by China economy — Samsung is taking a beating too

Samsung is preparing to follow Apple in warning of lower than anticipated revenue, with the South Korean electronics giant expected to advise of a 12-percent year-on-year quarterly operating profit drop, its first in a two-year period.

The announcement from Samsung, said to be arriving on Tuesday, is tipped to advise an operating profit of 13.3 trillion won ($11.85 billion) for the quarter. Revenue is expected to drop by 5 percent year-on-year, in part due to memory card shipment reductions amid a global smartphone market slowdown.

The bleak results, reported by the South China Morning Post, also states Samsung's profit for its global smartphone business has slipped by a fifth in the quarter. For the most part, it is suggested the issue stems from China, a market that fell 8 percent in terms of sales in the last three months, according to analysts from Counterpoint Research.

Apple has also cited China as a source of some of its financial grief during its revenue guidance on January 2, with lower-than-anticipated iPhone revenue "primarily in Greater China" accounting for all of the company's revenue shortfall. Upgrades in China were "not as strong as we thought they would be," the note from CEO Tim Cook advised.

For Samsung, the China smartphone slump is also affecting the company, but in different ways. Samsung is said to occupy less than 1 percent of the Chinese smartphone market compared to Apple's 9 percent, but its memory and processors are used extensively by smartphone vendors, accounting for over three quarters of its earnings and around 38 percent of sales.

The chip arm of Samsung is said to have slipped 3.7-percent year-on-year, while memory chip shipments are thought to have dropped 10 percent in the quarter. It is also noted that South Korea's semiconductor exports to China dropped in December for the first time in more than two years.

Samsung's profit decline is anticipated to continue through 2019, according to the report, with shifts in memory pricing unlikely to help turn things around anytime soon. DRAM chip prices dropped 10 percent in the fourth quarter, while NANF flash memory went down by 15 percent.

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20 Comments

StrangeDays 12959 comments · 8 Years

About 5 years ago

Quick, call for the CEO to be fired! Their products are too expensive! Old Samsung would never have done this! They’re out of touch! Um, what else...

ericthehalfbee 4489 comments · 13 Years

Wait a second.

Apple blames China for its revised guidance. Nobody wants to believe them and come up with their own BS theories like iPhones are too expensive or new models aren’t “innovative” enough.

Now Samsung is also going to blame China for reduced smartphone sales, corroborating what Apple said about the Chinese market.

Does everyone have their hypocrisy meter ready for this thread?

rogifan_new 4297 comments · 9 Years

Yet Nike didn’t issue any warnings. I think the China market for Nike was up over 30% in the holiday quarter. So is this a China economy issue overall or is it specific to tech where China has many competitive brands?

Rayz2016 6957 comments · 8 Years

rogifan_new said:

Yet Nike didn’t issue any warnings. I think the China market for Nike was up over 30% in the holiday quarter. So is this a China economy issue overall or is it specific to tech where China has many competitive brands?

Yes, because running shoes and consumer electronics occupy the same market.

🙄

ericthehalfbee said:

Wait a second.

Apple blames China for its revised guidance. Nobody wants to believe them and come up with their own BS theories like iPhones are too expensive or new models aren’t “innovative” enough.

Now Samsung is also going to blame China for reduced smartphone sales, corroborating what Apple said about the Chinese market.

Does everyone have their hypocrisy meter ready for this thread?

Indeed. I think the problem is people have been waiting for Apple to drop the ball for so long now; what we're now seeing is a the sudden release of a massive build-up of online lunacy that's been festering in the naysayers' collective gut for many many years.

I think it's called Apple Reflux.

To be honest, I find it hard to get excited about Apple announcing that they're going to have to settle for their second biggest revenue quarter instead of the first, especially since the problems are somewhat out of their control (though I think they were perhaps uncharacteristically optimistic in their first statement). For me, I tend to worry about the operational mistakes (the none-appearance of Airpower, the failure of the liquid metal initiative) because these are internal problems. China is something they will just have to adjust for.

People who bleat on about about the phone being too expensive probably don't understand how life works. One thing that has come out of this is that folk are now more aware that it actually costs money to build stuff, and that has to be recouped the selling price. Who knows, in ten years time, one or two of the banjo-strummers around here will probably understand that research and development costs and the wages of the folk who run the Apple Campus restaurants are also baked into the price of the products.

If people are happy with their iPhones then dropping the price will just result in lower revenues. You can shave £200 off it, and I still won't buy it until I'm ready to upgrade. The folk who upgrade every single year are outliers; not many people do that.