Samsung, Like Apple, Is Also Facing A Challenging Time
The Samsung branch in Hong Kong recently joined the league of tech behemoths that admitted to be going through tough business time and managing to survive its suffering.
On Tuesday, the Asian gadget-maker, which also holds proudly the position of being the biggest producer of smartphones worldwide, announced that the company’s operational, financial returns in the 4th quarter looks unpromising because it may dive to almost 30 percent from the year before, conspicuously lower than the predictions by experts.
The giant attributed the cause of the acute reduction to “drab sales requests” for the chips that bear its memory. Also, the stiff escalating rivalry that dominated the marketplace for trending phones is not helping matters.
Samsung puts up its guide on the heels of Apple’s declaration in the previous week. Apple had unexpectedly announced that smaller quantities of iPhones would be sold, a sharp deviation from the expectations of its customers. The key factor for this swift decision is because of unsatisfying sales requests from China in the midst of active unrest in trade matters going on between the Asian country and the US.
China was not particularly stated when Samsung made the release on issues surrounding its profits guide Tuesday. However, it didn’t mince words when it opened up that rising macroeconomic difficulties are hindering its commercial operations.
Competition as a factor
Seoul’s Samsung’s shares closed down roughly in 1.7 percent during the day. Almost one-quarter of the stock’s estimated value was hewed in 2018.
The unpalatable and worsening economic situation is intensely affecting the foremost smartphone maker in the world. Unfortunately, other businesses globally are also feeling the heat.
Apart from putting out its self-manufacturing phones for sale, Samsung also produces the major phone spare parts such as display phone screens and chips to its counterparts in the phone making industry. Screens called ‘OLED’ made by the company is included in the recent iPhones from Apple.
Samsung explained that it hopes to get the 4th quarter’s operating financial returns scheduled for last year. The estimated profits are $9.6 billion, in comparison to approximately $13.5 billion made during a similar period one year ago. The sales reduction was forecasted at the rate of roughly 11 percent to $52.5 billion.
The South Korean-based behemoth cautioned that the fragile business output may linger, foretelling its financial returns to remain suppressed during the 2019 1st quarter, owing to the hard times facing the market for memory productions. However, things may get better as the new year progresses.
Samsung also expects that improved atmosphere will soon emerge with the commencement of fresh technological programs such as 5G features and bendable smartphones. It would aid the company’s mobile branch to get stronger.
What are the experts saying?
Tech experts didn’t seem completely baffled with the new unfavorable special release from Samsung.
Analysts detected a problem in 2018. They postulated that the movers and shakers that assisted the growth of Samsung in 2017 had possibly disappeared by last year. Stakeholders were being careful, and the prices for the company’s shares were flat last year.
A research company called Gartner revealed that the sales of smartphones dropped by 5.6 percent by 2017 4th quarter. That incident marked the first shortfall since its initial occurrence in 2004. Phones lasted longer in possession of users than before, and as prices went higher stably, going closer to the benchmark of $1,000, people became more disinterested in spending lavishly on newly released smartphones.
An analyst from Singapore working for IDC, a research company, Kiranjeet Kaur, believed that a stiff competition exists between the tech company and other Chinese phone dealers, thereby stalling its growth in numerous markets. Asian South-East and India fast-rising markets are good examples.
Samsung still on top
Going by the recent information provided by IDC, the Asian tech titan still has on sales the highest volume of phones worldwide, but went through a shortfall market profits of 13 percent by the 3rd quarter of last year, in comparison to a similar period the year before. In another development, Huawei, the popular smartphone producer also in China, recorded 33 percent advancement.
Meanwhile, says Kaur, as many producers of smartphones still utilize Samsung in their supplying plans, prices of memory-storage chips have gone ahead of their peak periods.
The tech outfit will give the full feedback on the 4th quarter outcomes by January end.
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