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Samsung, Stung by Trade War, expects a big jump in profits



President Trump's trade war with China has been felt around the world. The latest accident: the South Korean electronics giant Samsung Electronics.

On Friday, the company said it expected the operating profit for the second quarter to fall by more than 50 percent, to 6.5 billion won or about $ 5.6 billion. The analysts only managed to beat expectations because of a one-time gain in their display business.

Samsung's disclosure on Friday illustrated the problems that an escalating series of trade fights are spreading in the global economy, especially for large companies selling finished products and components around the world.

Samsung, a leading component manufacturer of a number of gadgets, already experienced a slowdown in sales of smartphones and other technology products. It has been particularly hurt by a glut memory memory chip.

The continuing trade conflict between the United States and China has made things worse for the company. The trump management's restrictions on sales to Huawei, a major buyer of Samsung memory chips, have reduced the demand for the company's chips and forced to lower prices. Although President Trump recently said he would relax some of the restrictions, it is still unclear how far the easing will go.

This decline in Samsung's memory chip business is likely to be greater than what gains its smartphone division can reap from any fall in Huawei's competing product sales.

Samsung has also been forced to struggle with additional costs due to import duties on washing machines by the Trump administration in a step aimed at protecting US competitors such as Whirlpool.

Other trading battles can cause more pain in the short term. Japan has recently imposed export limits on materials used to produce screens and computers in South Korea, which are expected to damage Samsung and a top rival, SK Hynix.

And a wider economic downturn around the world can reduce demand for Samsung's range of products, including television and audio speakers.

Samsung is expected to report its full results later this month.


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