This article first appeared in The Edge Financial Daily, on January 29, 2016.

SEOUL: Slowing global demand for smartphones and memory chips dealt a blow to Samsung Electronics Co Ltd as it reported yesterday a 40% on-year drop in fourth-quarter (4Q) net profit.

The world’s top handset maker continued to be squeezed at both ends of the lucrative smartphone market with high-end competition from arch-rival Apple Inc matched by cheaper players like China’s Huawei Technologies Co Ltd and Xiaomi Inc.

But Samsung was not alone, with Apple reporting earlier this week that sales of its popular iPhone rose slower than ever last quarter, raising questions about the future of the saturated smartphone market.

Net profit for October to December stood at 3.22 trillion won (RM11.36 billion), below analyst expectations and down 39.7% from a year ago, the company said in a statement.

Operating profit rose 16.1% on-year to 6.1 trillion won, in line with its earlier estimate.

In a statement, the South Korean giant said 2016 was expected to throw up continued challenges to maintaining earnings “due to a difficult business environment and slowing IT (information technology) demand”.

Fourth-quarter earnings were down in the face of “global economic headwinds” including a sharp fall in oil prices, as the components side of the business was impacted by weakened prices for dynamic random-access memory chips and LCD panels due to overall softer demand in the IT market and personal computers. — AFP