The world’s biggest smartphone maker, Samsung Electronics, reported a slump in fourth-quarter net profits on Thursday, blaming weakening demand in key products and falling chip prices.
Net profit in the October-to-December period was 5.23 trillion won ($4.4 billion), down 38 per cent from a year ago, it said in a statement.
“Fourth-quarter profit dropped from a year earlier due to the continued fall in memory chip prices and weakness in display panels,” Samsung said in a statement.
The firm is the flagship subsidiary of the giant Samsung Group, by far the largest of the family-controlled conglomerates known as “chaebols” that dominate business in the world’s 12th-largest economy.
But it suffered a series of difficulties last year, with the global memory chip market – which has driven profits in recent years – hit by rising supply and falling demand.
The premium smartphone market has also grown fiercely competitive, with buyers waiting longer before upgrading to new models.
Samsung said it expects “weak sales from seasonality in memory chips, OLED and consumer electronics” in the first quarter of this year as the firm navigates “continued uncertainties in the global business environment”.
Operating profit dropped more than 30 per cent year-on-year to 7.2 trillion won, while sales in the fourth quarter stood at 59.9 trillion won.
For full-year 2019, the firm reported net profit of 21.7 trillion won, down 51 per cent from a year ago.
Samsung shares closed down 3.2 per cent in Seoul.
Samsung has been strained by a trade war between China and the US and caught in a diplomatic row between Seoul and Tokyo over wartime history, with Japan imposing tough restrictions on exports crucial to South Korean tech giants in July.
In another shadow hanging over the firm, its vice-chairman and de-facto leader Lee Jae-yong is on trial for the second time over a sprawling corruption scandal that led to the impeachment of South Korea’s former president Park Geun-hye.
A guilty verdict and long prison sentence would deprive the firm of its top decision maker.
Lee was initially jailed for five years in 2017 on multiple charges including bribery, then released after several of his convictions were quashed, only for the Supreme Court in August to order a retrial.