Samsung hit by slowing smartphone sales

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Samsung Electronics has been hit by falling sales for its smartphones and semiconductors.

The “difficult business environment and slowing IT demand” sent net profit for the fourth quarter to December down by 40% to 3.2tn won ($2.7bn, £1.9bn).

The South Korean giant warned it would be difficult to maintain profits this year at the same level as 2015.

Revenue for 2015 fell 5.6tn won to 200.6tn won ($165.5bn, £116bn) compared with the previous 12 months.

Strong competition from cheaper Chinese rivals such as Xiaomi and Huawei at the bottom of the market, as well as Apple at the premium end, has dented Samsung’s smartphone sales.

The Galaxy S6, the most recent top-of-the-range handset launched last April, failed to excite consumers and the company has struggled to maintain market share.

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Samsung’s S6 phones failed to excite consumers

‘Tough time ahead’

Jake Saunders, Asia-Pacific director at ABI Research, told the BBC: “It’s showing that they are under pressure – about half of their revenue comes from mobile devices.

“Xiaomi is getting traction in markets like India and Indonesia, which are very large markets for smartphone devices and it’s also where we see strong growth.

“The overall market only grew by a little bit over 2 % in 2015 so they are going to have a tough time,” Mr Saunders cautioned.

Samsung forecast single-digit percentage growth in both smartphone and tablet sales amid “softening demand and intensifying competition”.

“Despite this challenging environment, the company will focus on increasing smartphone shipments and maintaining a double-digit margin through releases of competitive devices,” the firm said.

Its other core business, semiconductors, has also met headwinds following weaker demand for personal computers.

Samsung makes components for the iPhone, which is itself facing a slowdown in sales.

Apple said on Tuesday it expected to report the first year-on-year decline in iPhone sales in the current quarter.

Shares in Samsung Electronics fell 2% in Seoul.

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