Samsung forecasts a steep plunge on its Q2 profit amid trade warfare

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Samsung forecasts a steep plunge on its Q2 profit amid trade warfare

On Friday, the 5th of July 2019, world’s No. 1 smartphone vendor, South Korean tech mogul, Samsung Electronics had forecasted a sharp downturn of its operating profit on Q2, 2019, as an escalated Sino-US trade spat had been inflicting fatal wounds on global smartphone and chipmaking markets, although some gains before inclining Trump’s China tariff on May had helped the smartphone maker beat analysts’ expectation.

In point of fact, over the narratives of declining chip prices amid a supply surplus and a US ban on China’s Huawei Technologies, a key client of Samsung Electronics, the South Korean tech tycoon has been on its course to post three quarters of decline in operating profit in a row on a year-on-year basis.

Aside from chipmakers likes of Samsung, other South Korean chipmakers had been facing crippling blow on their businesses including South Korean SK Hynix, as an unprecedent rise in tariffs had hurt global electronic demands.

Casting further shadows over the chipmaking industry, South Korea slashed in annual economic growth target on last Wednesday (July 3rd) to a 7-year-low figure, as its exports, in particular tech products, were slumped. Rubbing salts into the wounds further, Japan yesterday (July 4th) had put a ban on supplies to South Korean tech businesses, latest flashpoint in a Japan-Korea conflict of interests, which had every potentiality to turn into a tit-for-tat tariff war.

Addressing concerns over a Japanese export curb and Sino-US trade war, an analyst at Daishin Securities, Lee Kyoung-min said on Friday (July 5th), “There’s not enough to say positive earnings momentum has come.

Intensified U.S.-China war, and Japanese export curbs and signs of trade conflicts widening globally are likely to delay recovery”. Followed by the reveal of Friday’s (July 5th) forecast, shares of Samsung Elec were last down by 0.98 percent to 45,500 South Korean Won ($1=1,167.33 won).