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Operating Profit of Samsung Plunges 29% in Q4 2018

Apple last week downgraded its sales forecast for the last three months of 2018, suggesting a drop in orders for Samsung, one of the major chip providers for iPhones

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Samsung, speaker
Samsung files new patent application for 3D displays.

Samsung Electronics Co said on Tuesday its operating profit plunged 28.7 per cent in the fourth quarter compared with a year ago due to weak memory demand, falling far short of market expectations.

Operating profit came to 10.8 trillion won ($9.66 billion) in the October-December period, the South Korean tech behemoth said in a regulatory filing. This is down 38.5 per cent from 15.1 trillion won posted a quarter earlier, Yonhap news agency reported.

The operating profit was the lowest since the first quarter of 2017.

Sales fell 10.6 per cent on-year to 59 trillion won over the cited period, the company said.

The operating profit was far below market expectations of 13.6 trillion won, based on the survey conducted by Yonhap Infomax, the financial arm of Yonhap News Agency, on 23 South Korean brokerage houses.

Samsung did not announce the net profit for the fourth quarter, nor the performances of respective business divisions. The finalised earnings report will be announced later this month.

Samsung
The operating profit was the lowest since the first quarter of 2017.

For 2018, the company expected the operating profit and sales to reach 58.9 trillion won and 243.5 trillion won respectively on the back of strong demand for memory chips in the global market. The sales estimate is the record-high annual figure.

Samsung said demand for memory chips in the last three months of 2018 hovered far below the market expectation as major data centers adjusted their inventories, which drove down prices of DRAM products.

Sales of smartphones also slowed in the maturing market with promotion costs in the peak season cutting into its profitability, it noted.

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“Operating profits sharply decreased due to lacklustre demand in the memory division and intensifying competition in the smartphone sector,” Samsung Electronics said in a rare release for a preliminary earnings report.

The prices of DRAM, a type of memory used for the temporary storage in computer systems, sank 10 percent in the fourth quarter from the previous quarter due to weak demand for PCs, servers and smartphones, according to corporate tracker DRAMeXchange.

Apple last week downgraded its sales forecast for the last three months of 2018, suggesting a drop in orders for Samsung, one of the major chip providers for iPhones. (IANS)

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Apple, Samsung Can Change The Manufacturing Scenario In India: Minister

The government sees iconic companies like Apple and large consumer goods makers like Samsung as big players in electronics who can change the face of manufacturing in India, Minister of State for IT

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Samsung, Apple, Manufacturing, India
Apple and Samsung are very big players, they can change scenarios for private sector manufacturing, they can be role models for other companies to manufacture in India. Wikimedia Commons

The government sees iconic companies like Apple and large consumer goods makers like Samsung as big players in electronics who can change the face of manufacturing in India, Minister of State for IT and Telecom Sanjay Shamrao Dhotre has said.

“Apple and Samsung are very big players, they can change scenarios for private sector manufacturing, they can be role models for other companies to manufacture in India”, Dhotre told IANS in an exclusive interview.

On Monday, IT and Telecom Minister Ravi Shankar Prasad held a day-long round table with the CEOs of many global companies, including Apple and Samsung, to get feedback on their concerns and how those could be addressed to make India a top electronics manufacturing hub.

Revenue Secretary Ajay Bhushan Pandey and Niti Aayog CEO Amitabh Kant also attended the meeting.

Cupertino-based smartphone maker Apple Inc, was specially mentioned and nudged by Prasad to expand their presence in India.

“Apple has started manufacturing phones in India including components. They have started making iPhones in India and also components both for exports. But this is just a tip of the iceberg. I want a robust presence of Apple in India. A super robust presence of Samsung in India. Apple is also on board as far as the India story in concerned,” Prasad told media here after the meeting.

Samsung, Apple, Manufacturing, India
Samsung to come up with many new inventions as well, this year. Wikimedia Commons

The global IT and telecom CEOs raised issues of tariffs, taxes, single window clearance and component manufacturing, among others, with the Minister.

” The round table meeting was to only hear from them because many of their problems are similar– tax structure, tariffs , state level problems. Revenue secretary and Niti Aayog CEO were there and we all will sit together and resolve everything. Incentives or otherwise, there are some probles on the duty and the tax structure. And the revenue secretary has assured of looking into the issues”, Dhotre said.

Responding to a query on policies to boost electronics production, Dhotre said: “We are amending the policies in this regard. All the companies are very enthusiastic to invest and increase their presence in India. We will come out the new set up incentives in the next three to four months”.

The Minister also said that with the kind of policies and steps the ministry is taking, “we will certainly achieve the 400 billion dollar target by 2025”.

The National Electronics Policy, 2019 targets a turnover of $400 billion for the electronics system design and manufacturing (ESDM) sector by 2025.

Samsung, Apple, Manufacturing, India
An Apple company logo is seen behind tree branches outside an Apple store in Beijing, Dec. 14, 2018. VOA

Apple has started to export iPhones to some European markets from India. Its contract manufacturer Wistron Corp’s Indian arm is now exporting smart phones from their Bengaluru facility.

Bringing in new norms for FDI in single-brand retail, the government has recently allowed all procurement made in India by a single-brand retailer for that brand to be counted towards local sourcing, irrespective of whether the goods procured are sold in India or exported – which was a major relief for companies like Apple Inc.

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The new norms also allow firms to open online shops before setting up a physical store, which too helps Apple in regard to its India plans.

According to IT Ministry officials, as a fallout of the US-China trade tensions, it is believed that Apple’s suppliers and partners like Foxconn or Wistron are being nudged to gradually shift their production out of China.

Apple Inc last week launched the newest iPhone 11 starting at $699, as well as new gaming and content streaming subscription services, at aggressive monthly tariffs as the California-based company looks to create new revenue streams amidst falling phone sales globally. (IANS)