Samsung Warns of 'Challenges' Ahead as Profits Tumble by 56%

Samsung, the world's biggest smartphone and memory chip maker, has reported profit drops of 56% compared with this time last year.

While the South Korean firm has had widely reported issues with its foldable Galaxy Fold phone this year, economists are saying the profit drop is reflective of an industry lull caused in large part by the U.S.-China trade dispute.

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Industry uncertainty

In a statement released today, Samsung said: "the company is facing challenges from uncertainties not only in business areas but also from changes in the global macroeconomic environment."

The tech company also cited price drops and weakness in the memory chip market, though there has been "a limited recovery in demand."

Trade rows

Aside from feeling the effects of the widely reported U.S.-China trade war, Samsung is also facing more possible trouble due to a trade row between Seoul and Tokyo, the BBC reports.

Recently, Japan imposed export curbs on industrial materials necessary for Seoul's semiconductor and display screen industries. 

Samsung — which is based in South Korea — reported an operating profit of 6.6 trillion Korean won ($5.6bn) over the three months leading up to June. That constitutes a 56% drop from the 14.87 trillion Korean won reported over the same period in 2018. The result is in line with company estimates.

As CNBC writes, Samsung shares tumbled 2.58% in morning trade.

Investment in the future

Samsung had to delay the release of its Galaxy Fold phone earlier this year, though it is now due to be released in September.

Samsung expected this downturn in profits and now seems to be looking to the future. Aside from outlining the downturn in profits, the company's statement also states that "investments in future technologies such as AI, automotive components to continue."