Samsung Electronics’ operating profits fell by 33 percent i.e. a third in the fourth quarter of 2019 as compared to yesteryear. The Korean tech giant has had a pretty rough year. It also faced a 56 percent decline in profits in the third quarter.
Samsung is currently the world’s largest smartphone and chipset manufacturer but was hit with a number of significant inconveniences in 2019. One of them was the bloating of chipset stockpiles resulting in a decrease in chipset prices. In comparison to this, the chipset market boomed in 2018 bringing in a lot of revenue. On top of this, the premium smartphone market grew fiercely competitive since consumers have started waiting for a long time before upgrading to new models.
A few months ago, in an earning guidance statement, Samsung Electronics predicted operating profits in the October to December period at 7.1 trillion won ($6.1 billion), down 34.2 percent year-on-year. Sales were forecast to be flat at 59 trillion won and for the full-year 2019, it predicted operating profits of 27.7 trillion won, down 52.9 percent, on sales down 5.8 percent to 229.5 trillion won.
Even in the first three quarters of 2019, the Company’s net profits fell by more than half year-on-year. However, the Q4 profits were still better than expected due to a slight improvement in chipset demand and healthy smartphone sales. Which is why analysts are speculating better profits in 2020. DRAM and NAND memory markets are expected to rise. Moreover, the 5G network availability is also expected to pick up globally resulting in higher 5G smartphone sales.