SEOUL, January 8 -- Samsung Electronics has surprised the market today with an estimated 29% drop in quarterly profit. The company blamed weak chip demand in a rare commentary issued to "ease confusion" among investors already fretting about a global tech slowdown. The South Korean firm also said profit would remain subdued in the first quarter due to difficult conditions in memory chips. But it added that the market is likely to improve in the second half of the year as customers release new smartphones. Weaker earnings at the world's biggest maker of smartphones and semiconductors adds to worries for investors already on edge after Apple last week took the rare move of cutting its quarterly sales forecast, citing poor iPhone sales in China. China boasts the world's biggest smartphone market, but a slowing economy, exacerbated by a trade war with the US, has seen demand for gadgets drop across the tech sector. Growing support for domestic champions has also impacted foreign brands, with Samsung's market share falling to 0.9% from a high of 18.2% in 2013. But the South Korean firm's chips still power the handsets of most major makers, including Apple and China's market leader Huawei Technologies. Its memory and processor chips account for over three-quarters of overall profit and about 38% of sales. For October-December, Samsung estimated operating profit of 10.8 trillion won ($9.67 billion), missing the 13.2 trillion won average of 26 analyst estimates in an I/B/E/S Refinitiv poll. It also estimated an 11% fall in revenue at 59 trillion won. Samsung routinely releases estimated earnings figures before posting detailed results and elaboration toward the end of the month. For the just-ended quarter, however, it issued its first commentary since late 2014, when mobile phone profits dropped. It said weaker-than-expected demand from data centre customers adjusting inventories drove down chip prices and hurt earnings in the face of rising macro uncertainty. It did not disclose the customers or elaborate on the macro uncertainty. Data centre demand - mostly from the US - currently accounts for as much as nearly 30% of demand for Samsung's DRAM chips compared with 5% five years ago, analysts said. On the whole, analysts expect Samsung's profit to decline during 2019, with a slowing Chinese economy eroding demand.
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