Slowing global demand for smartphones as well as memory chips dealt a blow to Samsung Electronics as it reported on Thursday a 40 per cent on-year drop in fourth-quarter net profit. The world's top handset maker continued to be squeezed at both ends of the lucrative smartphone market with high-end competition from arch-rival Apple matched by cheaper players like China's Huawei and Xiaomi. Net profit for October to December stood at 3.22 trillion won ($2.7 billion), below analyst expectations and down 39.7 per cent from a year ago, the firm said in a statement.
Operating profit rose 16.1 per cent year-on-year to 6.1 trillion won, in line with its earlier estimate. The South Korean giant said 2016 was expected to throw up continued challenges to maintaining earnings "due to a difficult business environment and slowing IT demand".
Fourth quarter earnings were down in the face of "global economic headwinds" including a sharp fall in oil prices, as the components side of the business was impacted by weakened prices for DRAM chips and LCD panels due to overall softer demand in the IT market and personal computers.
Samsung's semiconductor business since late 2014 has helped offset slumping profits at the firm's key mobile unit. But sluggish demand for handsets and computers worldwide drove down prices for memory chips, squeezing margins
in the semiconductor unit, which posted the first drop in quarterly operating profit for about two years.