Samsung Cuts Capital Expenses In 2013, Aimed Weaker Global Market And Fewer Orders From Apple Inc. (NASDAQ:AAPL)

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The renowned Galaxy smartphone maker Samsung Electronics gets seriously concerned on expenses amidst the global financial crisis. The cut on spending decision is taken as the smartphone market slows in addition to sluggish demand for computer chips. For these reasons Samsung has planned to keep its annual investment plan unchanged at 2012 levels. Moreover, company also said it would keep its 2013 capital expenses unchanged from 2012.

The South Korea based technology company disclosed expenses of 4.4 trillion won in October and December. On Friday company reported a record quarterly and annual profit as well. Back in October company said it was on course to spend 25 trillion won for 2012. However the last year investment was pushed to a record 23 trillion won.

Since 2004 the electronics giant has efficiently ramped up capital expenses every year except for 2009 when company wanted to meet surging demand for a huge line of mobile gadgets and consumer electronics. Samsung is the industry’s most aggressive spender and for the last quarter it sold nearly 700,000 smartphones, beating rival Apple Inc. (NASDAQ:AAPL).

But now the South Korean IT conglomerate is forced to keep a lid on expenditures. The culprit is the global economic downturn. The global smartphone market is growing more slowly and PC market is shrinking for the first time in 11 years. Other technology firms like Apple are now buying fewer chips from Samsung for their phones production. Analysts had expected nearly 20 % cut in the capital spending of Samsung for 2013.

Conversely the Taiwanese competitor TSMC is considering increasing its capital expenses to 9 billion US dollars in 2013. The company was able to win Apple orders over Samsung. Shares of Samsung fell 2.1 % lagging a 1.1 % decline in the wider market.

AAPL shares traded down -2.36% to $439.88 in last trading session on Friday.


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