This article first appeared in The Edge Financial Daily, on January 7, 2016.

SEOUL: Tech giant Samsung Electronics Co Ltd may be due for another profit drop in 2016, as slowing demand for consumer electronics saps momentum for the less-glamorous components businesses that offset last year’s smartphone struggles.

The world’s top maker of memory chips and smartphones is expected to guide tomorrow its second straight quarter of annual profit growth for the October to December period. Analysts expect the South Korean firm’s overall 2015 earnings to have rebounded moderately from 2014, when profit fell for the first time in three years.

But slower growth in China and the persistent weakness of emerging market currencies are eroding demand for consumer electronics, undercutting prices of the memory chips and displays that Samsung leaned on to cope with its mobile profit decline, and clouding its earnings prospects.

A Thomson Reuters SmartEstimate derived from a survey of 30 analysts tips Samsung’s fourth-quarter profit to have risen 26% from a year earlier to 6.6 trillion won (US$5.52 billion or RM24.23 billion). But some brokerages recently cut their forecasts, citing weaker-than-anticipated components sales, pushing the stock to its lowest level in three months on Monday.

Researcher TrendForce expects 2016 global semiconductor sales to shrink 0.6% to US$329 billion, with memory chips seen as a major drag as global smartphone market growth slows.

The launch of Microsoft Corp’s Windows 10 operating system has failed to spark demand for personal computers, while some analysts say weaker-than-expected sales of Apple’s new iPhones are also hurting chipmakers. — Reuters