Apple not the only one hit badly by China economy -- Samsung is taking a beating too

Posted:
in General Discussion
Samsung is preparing to follow Apple in warning of lower than anticipated revenue, with the South Korean electronics giant expected to advise of a 12-percent year-on-year quarterly operating profit drop, its first in a two-year period.

Samsung Galaxy Note 9 (left), Apple's iPhone X (right)
Samsung Galaxy Note 9 (left), Apple's iPhone X (right)


The announcement from Samsung, said to be arriving on Tuesday, is tipped to advise an operating profit of 13.3 trillion won ($11.85 billion) for the quarter. Revenue is expected to drop by 5 percent year-on-year, in part due to memory card shipment reductions amid a global smartphone market slowdown.

The bleak results, reported by the South China Morning Post, also states Samsung's profit for its global smartphone business has slipped by a fifth in the quarter. For the most part, it is suggested the issue stems from China, a market that fell 8 percent in terms of sales in the last three months, according to analysts from Counterpoint Research.

Apple has also cited China as a source of some of its financial grief during its revenue guidance on January 2, with lower-than-anticipated iPhone revenue "primarily in Greater China" accounting for all of the company's revenue shortfall. Upgrades in China were "not as strong as we thought they would be," the note from CEO Tim Cook advised.

For Samsung, the China smartphone slump is also affecting the company, but in different ways. Samsung is said to occupy less than 1 percent of the Chinese smartphone market compared to Apple's 9 percent, but its memory and processors are used extensively by smartphone vendors, accounting for over three quarters of its earnings and around 38 percent of sales.

The chip arm of Samsung is said to have slipped 3.7-percent year-on-year, while memory chip shipments are thought to have dropped 10 percent in the quarter. It is also noted that South Korea's semiconductor exports to China dropped in December for the first time in more than two years.

Samsung's profit decline is anticipated to continue through 2019, according to the report, with shifts in memory pricing unlikely to help turn things around anytime soon. DRAM chip prices dropped 10 percent in the fourth quarter, while NANF flash memory went down by 15 percent.

Comments

  • Reply 1 of 20
    StrangeDaysStrangeDays Posts: 6,527member
    Quick, call for the CEO to be fired! Their products are too expensive! Old Samsung would never have done this! They’re out of touch! Um, what else...
    netmageericthehalfbeeracerhomie3olsLordeHawkwatto_cobrachasmjony0
  • Reply 2 of 20
    Wait a second.

    Apple blames China for its revised guidance. Nobody wants to believe them and come up with their own BS theories like iPhones are too expensive or new models aren’t “innovative” enough.

    Now Samsung is also going to blame China for reduced smartphone sales, corroborating what Apple said about the Chinese market.

    Does everyone have their hypocrisy meter ready for this thread?
    radarthekatmagman1979MplsPolswatto_cobrachasmjony0
  • Reply 3 of 20
    rogifan_newrogifan_new Posts: 3,752member
    Yet Nike didn’t issue any warnings. I think the China market for Nike was up over 30% in the holiday quarter. So is this a China economy issue overall or is it specific to tech where China has many competitive brands?
    muthuk_vanalingam
  • Reply 4 of 20
    Rayz2016Rayz2016 Posts: 4,556member
    Yet Nike didn’t issue any warnings. I think the China market for Nike was up over 30% in the holiday quarter. So is this a China economy issue overall or is it specific to tech where China has many competitive brands?
    Yes, because running shoes and consumer electronics occupy the same market. 

    🙄
    ericthehalfbeemagman1979racerhomie3coolfactorwatto_cobrajony0
  • Reply 5 of 20
    Rayz2016Rayz2016 Posts: 4,556member
    Wait a second.

    Apple blames China for its revised guidance. Nobody wants to believe them and come up with their own BS theories like iPhones are too expensive or new models aren’t “innovative” enough.

    Now Samsung is also going to blame China for reduced smartphone sales, corroborating what Apple said about the Chinese market.

    Does everyone have their hypocrisy meter ready for this thread?

    Indeed. I think the problem is people have been waiting for Apple to drop the ball for so long now; what we're now seeing is a the sudden release of a massive build-up of online lunacy that's been festering in the naysayers' collective gut for many many years.

    I think it's called Apple Reflux.

    To be honest, I find it hard to get excited about Apple announcing that they're going to have to settle for their second biggest revenue quarter instead of the first, especially since the problems are somewhat out of their control (though I think they were perhaps uncharacteristically optimistic in their first statement).  For me, I tend to worry about the operational mistakes (the none-appearance of Airpower, the failure of the liquid metal initiative) because these are internal problems. China is something they will just have to adjust for. 

    People who bleat on about about the phone being too expensive probably don't understand how life works. One thing that has come out of this is that folk are now more aware that it actually costs money to build stuff, and that has to be recouped the selling price. Who knows, in ten years time, one or two of the banjo-strummers around here will probably understand that research and development costs and the wages of the folk who run the Apple Campus restaurants are also baked into the price of the products. 

    If people are happy with their iPhones then dropping the price will just result in lower revenues. You can shave £200 off it, and I still won't buy it until I'm ready to upgrade. The folk who upgrade every single year are outliers; not many people do that.
    magman1979watto_cobra
  • Reply 6 of 20
    magman1979magman1979 Posts: 1,108member
    How much do you want to bet that these upcoming Samsung results will be as bleak, if not worse than, Apple’s adjustments, and instead of punishing Samsung like Wall Scum did Apple, they will spin the facts (like they always do) and REWARD Samsung with a boost in stock value?

    I got this little inkling that we should be expecting this tomorrow...
    Rayz2016 said:
    Wait a second.

    Apple blames China for its revised guidance. Nobody wants to believe them and come up with their own BS theories like iPhones are too expensive or new models aren’t “innovative” enough.

    Now Samsung is also going to blame China for reduced smartphone sales, corroborating what Apple said about the Chinese market.

    Does everyone have their hypocrisy meter ready for this thread?

    Indeed. I think the problem is people have been waiting for Apple to drop the ball for so long now; what we're now seeing is a the sudden release of a massive build-up of online lunacy that's been festering in the naysayers' collective gut for many many years.

    I think it's called Apple Reflux.

    To be honest, I find it hard to get excited about Apple announcing that they're going to have to settle for their second biggest revenue quarter instead of the first, especially since the problems are somewhat out of their control (though I think they were perhaps uncharacteristically optimistic in their first statement).  For me, I tend to worry about the operational mistakes (the none-appearance of Airpower, the failure of the liquid metal initiative) because these are internal problems. China is something they will just have to adjust for. 

    People who bleat on about about the phone being too expensive probably don't understand how life works. One thing that has come out of this is that folk are now more aware that it actually costs money to build stuff, and that has to be recouped the selling price. Who knows, in ten years time, one or two of the banjo-strummers around here will probably understand that research and development costs and the wages of the folk who run the Apple Campus restaurants are also baked into the price of the products. 

    If people are happy with their iPhones then dropping the price will just result in lower revenues. You can shave £200 off it, and I still won't buy it until I'm ready to upgrade. The folk who upgrade every single year are outliers; not many people do that.
    Yes, in the last few days, I’ve already encountered several media spoon-fed idiots who are coming up to me saying “See?! Apple is shit, they can’t innovate, their phones are trash, and now they’re paying the price!”... I’ve tried “talking” some facts to these people, with almost NO success, and the others are so stupid I’ve just told them to fuck off.

    I expect this to be the Wall Scum anthem until at least Apple’s next Quarterly conference call, and then maybe the anal-ysts will change gears...
    ericthehalfbeeeskaricwatto_cobra
  • Reply 7 of 20
    avon b7avon b7 Posts: 3,206member
    Wait a second.

    Apple blames China for its revised guidance. Nobody wants to believe them and come up with their own BS theories like iPhones are too expensive or new models aren’t “innovative” enough.

    Now Samsung is also going to blame China for reduced smartphone sales, corroborating what Apple said about the Chinese market.

    Does everyone have their hypocrisy meter ready for this thread?
    Prices are expensive and innovation has lacked in the 2018 refresh.

    Users have price ceilings. Forget margins. The final price - sales taxes included - is what affects purchasing decisions the most. If you tie a high price to a slightly better but not ground breaking upgrade, and people start hitting their price ceilings, the result is a slowdown.

    Remember. Those pre Christmas promotions were present in many more markets than China. That is telling.
    edited January 7 muthuk_vanalingam
  • Reply 8 of 20
    jdgazjdgaz Posts: 337member
    Well that kind of blows up the theory that it's all the fault of the trade war, unless of course South Korea is having a trade war with China.
    muthuk_vanalingam
  • Reply 9 of 20
    Rayz2016 said:
    Wait a second.

    Apple blames China for its revised guidance. Nobody wants to believe them and come up with their own BS theories like iPhones are too expensive or new models aren’t “innovative” enough.

    Now Samsung is also going to blame China for reduced smartphone sales, corroborating what Apple said about the Chinese market.

    Does everyone have their hypocrisy meter ready for this thread?

    Indeed. I think the problem is people have been waiting for Apple to drop the ball for so long now; what we're now seeing is a the sudden release of a massive build-up of online lunacy that's been festering in the naysayers' collective gut for many many years.

    What's that "splat" sound you hear?

    It's millions of haters/losers/idiots all over the world having a collective orgasm at hearing this news. Seems they can only be happy when there's bad news about Apple.
    watto_cobra
  • Reply 10 of 20
    Mike WuertheleMike Wuerthele Posts: 4,091administrator
    jdgaz said:
    Well that kind of blows up the theory that it's all the fault of the trade war, unless of course South Korea is having a trade war with China.
    It depends on what caused the economic drop in the first place.
    watto_cobra
  • Reply 11 of 20
    avon b7 said:
    Wait a second.

    Apple blames China for its revised guidance. Nobody wants to believe them and come up with their own BS theories like iPhones are too expensive or new models aren’t “innovative” enough.

    Now Samsung is also going to blame China for reduced smartphone sales, corroborating what Apple said about the Chinese market.

    Does everyone have their hypocrisy meter ready for this thread?
    Prices are expensive and innovation has lacked in the 2018 refresh.

    Users have price ceilings. Forget margins. The final price - sales taxes included - is what affects purchasing decisions the most. If you tie a high price to a slightly better but not ground breaking upgrade, and people start hitting their price ceilings, the result is a slowdown.

    Remember. Those pre Christmas promotions were present in many more markets than China. That is telling.

    That's it. Keep trumpeting your talking points about price and innovation. Repeating lies doesn't make them true, you know.
    radarthekatwatto_cobra
  • Reply 12 of 20
    tzeshantzeshan Posts: 1,855member
    There are many cross currents working together. So arguing what caused Apple revenue shortfall is like Blind Men arguing what an elephant look like. Every one is firmly believed he is right. Because this is where he touches. The reality is the sum of all cross currents makes the Apple revenue shortfall. 
    MplsP
  • Reply 13 of 20
    MplsPMplsP Posts: 1,004member
    avon b7 said:
    Wait a second.

    Apple blames China for its revised guidance. Nobody wants to believe them and come up with their own BS theories like iPhones are too expensive or new models aren’t “innovative” enough.

    Now Samsung is also going to blame China for reduced smartphone sales, corroborating what Apple said about the Chinese market.

    Does everyone have their hypocrisy meter ready for this thread?
    Prices are expensive and innovation has lacked in the 2018 refresh.

    Users have price ceilings. Forget margins. The final price - sales taxes included - is what affects purchasing decisions the most. If you tie a high price to a slightly better but not ground breaking upgrade, and people start hitting their price ceilings, the result is a slowdown.

    Remember. Those pre Christmas promotions were present in many more markets than China. That is telling.

    That's it. Keep trumpeting your talking points about price and innovation. Repeating lies doesn't make them true, you know.
    Well, if they were true in the first place.

    there was a piece in The NY Times called ‘Apple’s Problem: my mother’ essentially it said the same thing. New iPhones are expensive and older models are still very functional and full users’ needs giving them little incentive to upgrade. 

    I would think Samsung would be more insulated from this, though, since they are more diversified than Apple. 

    Regardless, I think this is largely an artifact of the maturing smartphone market. Domestic sales are flattening leading to a disproportionate dependence on foreign markets like China for growth, and a disproportionate impacy when that market changes for any reason. People may criticize Apple’s pricing, but beyond that it’s out of Apple’s (or Samsung’s) control. 
  • Reply 14 of 20
    coolfactorcoolfactor Posts: 1,368member
    Yet Nike didn’t issue any warnings. I think the China market for Nike was up over 30% in the holiday quarter. So is this a China economy issue overall or is it specific to tech where China has many competitive brands?

    The Huawei situation is a big contributor to Apple's (and Samsung's) reduction in sales, too. Many nationalists are choosing to support their home-grown brand. A major movement is happening in that regard. It's bad for Apple in China.

    I just hope people in China have common sense. I'm hugely pro-Canadian (being a Canadian), but I would never have bought RIM/Blackberry just to support a Canadian company. Their devices were junk!  :D
    edited January 7 radarthekatwatto_cobra
  • Reply 15 of 20
    avon b7avon b7 Posts: 3,206member
    avon b7 said:
    Wait a second.

    Apple blames China for its revised guidance. Nobody wants to believe them and come up with their own BS theories like iPhones are too expensive or new models aren’t “innovative” enough.

    Now Samsung is also going to blame China for reduced smartphone sales, corroborating what Apple said about the Chinese market.

    Does everyone have their hypocrisy meter ready for this thread?
    Prices are expensive and innovation has lacked in the 2018 refresh.

    Users have price ceilings. Forget margins. The final price - sales taxes included - is what affects purchasing decisions the most. If you tie a high price to a slightly better but not ground breaking upgrade, and people start hitting their price ceilings, the result is a slowdown.

    Remember. Those pre Christmas promotions were present in many more markets than China. That is telling.

    That's it. Keep trumpeting your talking points about price and innovation. Repeating lies doesn't make them true, you know.
    It's an 'S' cycle. Are you surprised by the lack of real innovation? 

    What lies are you referring to?

    Have you seen what the smartphone world brought us in 2018? Apple wasn't exactly leading the way (which for an 'S' cycle is pretty much explains it all).

    Accept it or not but don't accuse people of lying.
    muthuk_vanalingam
  • Reply 16 of 20
    gatorguygatorguy Posts: 19,805member
    From the same CounterPoint Research, earlier today
    https://www.counterpointresearch.com/overall-iphone-sales-20-yoy-november-iphone-xr-became-best-selling-model/

    Key points from our monthly model tracker service below:

    • Sale of new iPhones (XR/XS/XS MAX) launched in November were down over 20% YoY compared to last year’s launches (8/8 Plus/X).
    • The iPhone XR series outsold XS and XS Max series, iPhone XR 64 GB became the best-selling iPhone during the month.
    • iPhone XR sales, when compared to iPhone 8, were down 5%, both being the cheapest new iPhone available during the month of their respective launches.
    • Similarly, iPhone XS, when compared to iPhone 8 Plus, was up 3% YoY. iPhone XS Max, when compared to iPhone X during the same month last year, shows a 46% decline in sales. However, cumulative sales of iPhone XS Max were 50% higher till November than that of iPhone X last year due to the early availability of the higher priced models this year.
    • We estimate iPhone XR to further eat into the share of higher-priced iPhone XS and XS Max during December 2018.
    • Sales in China during November were steady due to the popular 11.11 (Single’s Day) sales. Even then, sales of iPhone XR remained lower than expected due to a lack of innovative features and just one camera. And while it’s the cheapest new iPhone, it still is expensive compared to local competitor products.
    • China iPhone sales in December will be down partly due to the ongoing trade war between US-China and Chinese companies encouraging employees to buy smartphones from Chinese OEMs.
    • We are also expecting an increase in sales of older iPhone models like iPhone 8 and iPhone 7 in emerging markets due to the high price of newer models.
    muthuk_vanalingam
  • Reply 17 of 20
    anomeanome Posts: 1,224member
    Quick, call for the CEO to be fired! Their products are too expensive! Old Samsung would never have done this! They’re out of touch! Um, what else...

    Samsung is DO0MED!!!1!!

    I think that's everything.

    watto_cobra
  • Reply 18 of 20
    MplsPMplsP Posts: 1,004member
    anome said:
    Quick, call for the CEO to be fired! Their products are too expensive! Old Samsung would never have done this! They’re out of touch! Um, what else...

    Samsung is DO0MED!!!1!!

    I think that's everything.

    Didn't he get arrested for forcing an airplane to turn around when they got roasted his nuts wrong or something like that?
    watto_cobra
  • Reply 19 of 20
    tbornottbornot Posts: 105member
    Perhaps the Chinese found that phones are a waste of time, and disrupt family and personal ties?
  • Reply 20 of 20
    chasmchasm Posts: 1,094member
    jdgaz said:
    Well that kind of blows up the theory that it's all the fault of the trade war, unless of course South Korea is having a trade war with China.
    It doesn't at all. Maybe try reading the article?

    FTA: "Samsung is said to occupy less than 1 percent of the Chinese smartphone market compared to Apple's 9 percent, but its memory and processors are used extensively by smartphone vendors, accounting for over three quarters of its earnings and around 38 percent of sales."

    So ... follow me on this one ... if the trade war is causing the Chinese economy to tank (and while it may not be the only factor, it's certainly a big one) ... then this is going to hurt Samsung a lot, because more than a third of their sales and 75 percent of their earnings are tied to smartphone vendors.
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