Samsung said Tuesday its quarterly profits may drop as much as 30 percent and LG Electronics predicted an even larger decline, compounding concerns that President Trump’s trade fight with China is undermining tech earnings.
Net income at Seoul-based Samsung, which manufactures the Galaxy line of Android phones, may have dropped to roughly $9.7 billion in the last three months of the year, while overall sales are estimated to have tumbled nearly 11 percent to roughly $52 billion. Samsung is poised to report its full quarterly earnings later this month.
Fellow South Korea-based tech firm LG Electronics said its fourth-quarter profits would drop by nearly 80 percent. Revenue at LG, the world’s second-largest television manufacturer behind Samsung, could fall as much as 7 percent in the three-month period to roughly $14 billion.
[Related: Trump adviser Larry Kudlow calls on Apple’s Tim Cook, other CEOs to pressure China on trade]
The announcements illustrate how Trump’s tariffs on $250 billion in Chinese products are exacerbating a potential slowdown in the country’s economy, leading to lower sales of popular products like smartphones. Negotiations continue on a broader trade deal to address key U.S. concerns like Beijing’s theft of intellectual property, and top White House officials are confident an agreement can be reached.
The administration is already planning, however, to increase the existing tariffs from 10 percent to 25 percent, as well as add levies on another $267 billion in imports if discussions fall flat. The White House also previously imposed double-digit duties on steel and aluminum imports, spurring turmoil in the automotive industry.
Apple earlier this month slashed earnings projections in the first quarter of its 2019 budget year to $84 billion, citing a slowdown in smartphone sales due to trade tensions between the U.S. and China. And Chinese carmaker Geely on Monday said it missed its sales target for 2018 and estimated that sales would be flat in 2019.
