Samsung Electronics is encumbered by low sales and falling demand for its semiconductors and smartphones.
Samsung Smartphone Sales Fall Amidst Cheaper Competitors
The decline in sales has been attributed to a slowdown in demand for IT products and a tough business environment.
Net profits for the three months to December 2015 saw fell by 40% to $2.7bn.
The electronics giant said that 2016 profits may be significantly lower than they were in 2015.
In 2015, revenue fell by $165.5bn compared to a year before.
Competitors such as Huawei and Xiaomi are offering much cheaper products for the lower-end market while Apple has stolen the upper markets, dealing a blow to Samsung’s smartphone sales.
Samsung’s top of the class handset, Galaxy S6, was not well received by consumers, leaving the South Korean giant struggling to maintain its market share.
Tough competition, soft demand
According to Jake Saunders of ABI Research in Asia-Pacific, close to half of Samsung’s revenue comes from mobile devices and the low sales shows they are under pressure.
Saunders added, “In markets such as Indonesia and India, Xiaomi is rapidly gaining traction. These are very large smartphone markets and there is strong growth in this region.”
Overall, the market grew by just slightly more than 2% in 2015 and Samsung may be set for tough times ahead.
As demand softens and competition intensifies, Samsung is projecting percentage growth in the single digits for tablets and smartphones.
The firm said that in spite of the difficult business environment, the company would continue to focus on shipping out more and developing competitive devices to maintain a double-digit margin.
Amidst slower demand for personal computers, Samsung has also reported its semiconductors, its other main source of income, are experiencing declining sales.
Apple sources components from Samsung but the iPhone is also facing lower sales, with Apple reporting a year on year slowdown in iPhone sales for the first time.