Samsung Electronics warned of slowing demand and economic turbulence after its quarterly earnings missed analysts’ estimates, joining Apple in foretelling a downbeat 2016 for the technology sector.
Apple Inc CEO Tim Cook seems a little freaked out by the global economy
AP Photo/Richard Drew
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The Korean conglomerate, whose quarterly profit fell short of expectations by almost 40 per cent, said the deteriorating global economy was eroding demand for computers and smartphones and depressing component prices. Samsung will invest in new screen and semiconductor technologies such as foldable displays to try and boost profit, executives said on a conference call.
Samsung’s warning came days after Apple — its biggest customer according to data compiled by Bloomberg — predicted its first sales decline in a decade. Chief executive officer Tim Cook said the company was seeing “extreme conditions” unlike anything the world’s largest technology company had ever encountered, with economic growth in China at its weakest pace in 25 years.
“All technology companies around the world will face a very tough industry ahead. Until the overall demand picks up, it’s a matter of how well they can hold out instead of how well they can battle out,” said Yoo Eui-hyung, an analyst at Dongbu Securities Co. “For 2016, since no demand growth is expected, it largely depends on how well the supply of chips and displays can be managed.”
Shares of Samsung, the world’s biggest maker of phones, displays and memory chips, finished 2.6 per cent lower in Seoul. The stock has fallen more than 9 per cent this year, compared with a 2.8 per cent decline in the benchmark Kospi index.
The cautionary tones adopted by Apple and Samsung sent ripples through an industry whose fortunes are entwined with the market’s two leading players. Mobile component suppliers TDK Corp., Murata Manufacturing Co. and LG Display Co. slid on Thursday after Apple shares tumbled 6.6 per cent.
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