Investors’s are uneasy about Samsung’smarket strength after Apple’s rocking of its own suppliers stock prices. But their concern is also due to China’s weakening economy and from Apple’s relationship and status with the Chinese government amid its recent set back by one its courts handing own a decision for Apple to remove its iPhones from the Chinese marketplace.
Samsungis not connected to these issues says, Daniel Yoo, head of global strategy and research at South Korea-based Kiwoom Securities. And according to Yoo, the economic downturn in China will have little influence on Samsung as it does with Apple.
Yoo says that’s because Samsung, which is the world’s largest chipmaker and smartphone maker, has less than 1 percent of mobile phones in China, [which is determined by market share], so it will not be affected by China’s overall economy as far as smartphone sales go.
Neither is Samsung worried about China getting into the ring to build up its semiconductor industry [which is China’s plan for its Made in China aspirations], because of China’s continuing tension in trade wars with the US which is only one aspect affecting the slowdown of its economy.
“Which means Samsung will continue to be [the] dominant player in this business for the long period of time,” Yoo said.
However, while chipmaking for smartphones and data centers is a huge component of Samsung’s business and while it posted a 21 percent rise in profits, it is also a supplier of components for Apple’s iPhones and is Apple’s competitor in the smartphone market. So, investors are thinking what affects Apple will have an indirect affect on Samsung.
Data coming out of China reports that factory activity in small, medium and large businesses slowed down in December which is at the core of concerns of an economic slowdown amid heightened trade tensions China has with the US.
Because Apple’s performance is a potential risk, Yoo is predicting Samsung’searnings growth to be in the negative for 2019.
Gil Luria, director of research at D.A. Davidson & Co, told CNBC that an economic slowdown in China may have a “chilling effect on many more companies that do business in the country.”
Meanwhile, according to the International Data Corporation the year-over-year reports for Samsung’s global smartphone shipments showed a more than 13 percent decline over the third quarter for 2018. Whereas, a 0.5 percent fractional gain was seen by Apple.