Samsung has today reported a steep 40% decline in net profits in its Q4 earnings, stating that its chip and component business has been hit by weaker prices. It revealed that net profit for the final quarter of 2015 fell to 3.2T Korean won ($2.7B), significantly short of market expectations.

Facing global economic headwinds, including a sharp fall in oil prices, the company’s fourth quarter earnings fell QoQ, as the components side of the business was impacted by weakened prices for DRAM chips and LCD panels due to overall softer demand in the IT market and PCs.

Samsung’s smartphone business has long been struggling with increased competition from lower-cost Chinese brands, and the WSJ reports that the company expects things to be even tougher this year …

On a call with analysts on Thursday, Samsung mobile executive Lee Kyeong-tae warned that “competition among smartphone players will intensify even further as a consequence of market growth slowdown.”

The company has previously been able to rely on income from its chip business to offset lower profits from mobile sales, but a supply glut reduced prices in the final quarter of the year. Samsung is now hoping that Internet of Things products marketed under the Smart Home brand will prove its saviour.

The company will make efforts to secure profitability for each business unit while it will also focus on reinforcing mid- to long-term business competitiveness, including new business areas such as the Internet-of-Things (IoT) […]

For the consumer electronics business, the company plans to lead the Smart Home era with diverse IoT-enabled products.

So far, competition in IoT is primarily between the big players, Samsung pitching itself against Apple’s HomeKit and LG’s SmartThings, but it’s likely that we’ll see further competition from Chinese players in this field too.

Photo: The Enquirer

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