It’s not just Apple: Samsung too could blame China for its first operating profit drop in 2 years

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While Apple took a lot of beating over a shock announcement saying the company would miss its quarterly guidance by billions of dollars, rival Samsung is now expected to report tomorrow a twelve percent annual drop in quarterly operating profit for the first time in two years.

According to South China Morning Post, Samsung will announce an operating profit of 13.3 trillion won, or approximately $11.85 billion, for the Christmas quarter. Revenue should decrease by five percent annually, half as much as Apple’s expected ten percent revenue drop.

The story asserts that Samsung will report a twenty percent drop for its global smartphone business. The company’s memory and chips will reportedly account for about 75 percent of its earnings and around 38 percent of sales during the lucrative holiday quarter.

Their semiconductor business seems to be experiencing some disruptions as well, having contracted 3.7 percent annually while chip shipments are estimated to have dropped ten percent in the quarter. For some context, DRAM prices went down by ten percent and NAND flash memory decreased by fifteen percent in the holiday quarter.

Just like Apple, Samsung should blame its poor performance in China on the fact that sales in the Chinese market did in fact contract eight percent during the last three months.

Samsung used to be the top phone vendor in China but competition from Huawei, Oppo and other domestic firms has eroded its leadership position. The South Korean firm is estimated to currently hold less than one percent of the Chinese phone market versus Apple’s nine percent.