Samsung Warns Of Earnings Miss Due To Slumping Smartphone, Chip Demand

Samsung is warning today that its coming financial results will be disappointing as prices for chips and LCDs have fallen as smartphone sales continue to slow. Samsung and Apple have both experienced sales slowdowns as they continue to push prices of smartphones higher in the face of lengthening upgrade cycles.

Samsung has stated that there is a "widening price fall among major products" and a "weakening overall demand." Samsung rarely admits that its figures will miss goals; the early admission that earnings will fall sort have some fearing that the shortfall will be significant. The smartphone industry saw a 7% sales decline overall during Q4 2018, which marked the fifth consecutive decline in quarterly shipments according to research firm Counterpoint.

Other than prices driving ever higher, consumers are also not upgrading as they used to because smartphones often offer only minimal upgrades with each new version with no compelling features to push consumers to replace current devices. Some smartphone suppliers have focused on other countries, like China, where the economy is growing faster and more people are upgrading. However, Apple saw its sales in China drop a whopping 25% in Q4 2018 to $13.17 million as consumers in the country choose cheaper domestic brands like Huawei and Xiaomi.

Samsung is having success with its new Galaxy S10 series of smartphones and rumors point to a Note 10 launching this summer. Despite Samsung S10 devices having strong preorders, chip sales are the bulk of profits at Samsung, and the sagging overall market has hit it hard. Samsung has stated that it would be boosting its competitiveness by launching products that are more technologically sophisticated and higher quality.