File: Samsung electronics faces increasing competition from Chinese manufacturers.
SEOUL, South Korea - Samsung Electronics, the world's biggest smartphone and memory chip maker, reported a slump in fourth-quarter net profits on Thursday, blaming a drop in demand for its key products.
Net profits in the October-December period were $7.6-billion (R101,5-million) it said, down 31% year-on-year.
The firm is the flagship subsidiary of the giant Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in the world's 11th-largest economy, and are crucial to South Korea's economic health.
But it is facing increased competition in smartphones from Chinese manufacturers, while the global memory chip market -- which has driven profits in recent years -- has been hit by rising supply and falling demand.
"Fourth quarter earnings were affected by a drop in demand for memory chips used in data centres and smartphones," Samsung Electronics said in a statement.
It expected demand for chips "to remain weak in the first quarter due to seasonality and macroeconomic uncertainties as well as inventory adjustments by major customers".
The company's display businesses, it said, would be hit by "slow sales of premium smartphones", increasing competition, and "large-scale capacity expansions in the industry".
For the full year 2018, the firm reported record net profits of 44.3-trillion won, up 5.1% year-on-year.
But it projected overall earnings to fall this year, "due to weaker performance by the memory business".