Tech giant Samsung Electronics Co Ltd (SSNLF) said Friday its fourth-quarter operating profit likely missed market expectations, fuelling concerns the tech industry may be in for a tough year of weak gadget sales.
Slowing economic growth in China and weaker emerging market currencies are undermining sales of consumer electronics and related components, spelling trouble not only for smartphone market leaders Samsung and Apple Inc (AAPL), but for their suppliers and the broader industry.
Samsung said in a regulatory filing its October-December operating profit likely rose 15% from a year earlier to 6.1 trillion won ($5.10 billion), compared with a consensus forecast of KRW6.6 trillion won. Revenue likely rose 0.5 percent to KRW53 trillion, the firm said without elaborating.
“Semiconductor earnings were weak and the smartphone industry entered a phase of low growth,” KTB Investment analyst Jin Sung-hye said.
Samsung shares ended up 0.7% Friday, in line with the broader market on a day dominated, as the rest of the week, by news from the Chinese stock market (which stabilized on Friday).
“I think Samsung did well considering the weaker tech demand,” Jin said.
The guidance was not a major surprise as Samsung Chief Executive Kwon Oh-hyun had warned on Monday that the maker of Galaxy smartphones faced a challenging time ahead due to weak global economic growth. Its shares had hit a three-month low on Wednesday.
The shares of rival Apple and of industry suppliers have been battered this week by signs of slowing demand from China, the world’s biggest smartphone market. Apple has fallen below $100 for the first time in 16 months after reports of it cutting production of the iPhone 6 in order to let unsold inventory clear. Major component makers Cirrus Logic Inc (CRUS) and Qorvo Inc (QRVO) also suffered after cutting their revenue estimates for the third quarter.
(For more on Apple’s share woes this year, click on the video below.)
LG Display Co Ltd (LPL), the world’s top liquid crystal display maker, also warned of tough conditions for the January-March quarter and said the panel industry faced oversupply problems.
“Currently there’s no visible sign of demand recovery,” said Avril Wu, research director at market analysis firm DRAMeXchange.
But while the overall market may be slowing, some producers are still expanding. Chinese firm Huawei Technologies Co said its 2015 smartphone shipments defied the slowdown and jumped 44%.