Samsung Electronics warns of near-30 percent profit slump

Samsung leads the global smartphone market with a 20 percent share

Samsung also said that the profit will remain "subdued" for the first quarter of 2019 but is expected to pick up in the second half of the year as their customers release new smartphones.

Samsung - the world's top maker of smartphones and memory chips - has enjoyed record profits in recent years despite a series of setbacks, including a humiliating recall and the jailing of its de facto chief.

In its earnings guidance for Q4 2018, Samsung Electronics said it expected sales to be down roughly 11 percent year-on-year to about 59 trillion won (about $52.5 billion)-analysts were predicting $56.2 billion.

Amid the smartphone woes, overall operating profit at Samsung's chip business is expected to have slipped 3.7 percent from a year ago to 10.5 trillion won.

Samsung said it expects earnings to remain subdued in the first three months of the year due to hard conditions for memory.

The news battered world equities, with observers saying problems at the usually reliable US titan could point to broader demand weakness and the China-US trade war cited as a key factor.

"Recovering demand in the first quarter can not be expected, because it is a seasonally low period and customers also know prices are coming off, so there's no rush to buy", said Sanjeev Rana, a Korea technology analyst at CLSA."In the second quarter Samsung launches the Galaxy S10 and a lot of other Android makers announce new model launches that might help smartphone demand and enhance the demand for DRAM".

A man tries out a Samsung Electronics' Galaxy Note 9 at its store in Seoul, South Korea Jan. 7, 2019.

While Samsung still leads the world in smartphone sales, it's being squeezed by Chinese handset makers like Huawei Technologies Co.

The warning, which comes ahead of Samsung's latest financial results later this month, will spark new fears of a slowdown in the tech market which has already seen precipitous drops in many companies' share prices.

Moving on to the reasons why, it seems the intensifying competition from Chinese rivals have affected the brand more than initially expected in the smartphone market. The world's largest smartphone maker by shipment has been increasingly dependent on chips for profit growth, riding on a spike in global data traffic while yielding to stiffer competition for phones.

The 50-year-old scion was a key figure in the scandal that ousted former South Korean President Park Geun-hye following massive nationwide protests, and was sentenced to five years in jail last year.

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