Samsung Electronics’ operating profit plummeted 69% to $3.4 billion in the quarter that ended in December to an eight-year low, according to its preliminary estimates, as the global demand for memory chips and smartphones wanes due to high inflation and slowing economy.

“Amid continued external uncertainties, including a potential global economic downturn, overall earnings decreased sharply quarter on quarter as we saw a significant drop in the memory business results due to lackluster demand and weaker sales of smartphones,” the company said in a statement.

The memory chipmaker and smartphone producer saw sales of 70 trillion won ($55 billion) in the quarter, down roughly 8.6% over the same period a year ago.

“For the memory business, the decline in the fourth quarter demand was greater than expected as customers adjusted inventories in their effort to further tighten finances by concerns over deteriorating consumer sentiment,” the market researcher said. “Profits from the mobile experience business declined as smartphones sales and revenue decreased due to weak demand resulting from prolonged macro issues.”

Geopolitical risk is another concern for semiconductor companies tangled in the tech war between the U.S. and China. Last October, the U.S. rolled out new export controls requiring companies to obtain licenses to sell semiconductor chips for supercomputers and artificial intelligence to Chinese firms.

The large chip conglomerates in South Korea will benefit from a tax credit of 15%, up from the planned 8%, on investment in manufacturing facilities; small and mid-sized semiconductor companies will get a tax break of as much as 25%, up from 16%, according to South Korean finance ministry.

The tech giant will announce a full earnings statement, including net profit, for the fourth quarter and provide more details on at the end of this month.

Samsung’s quarterly profit hits 8-year low amid weak demand for memory chips, smartphones by Kate Park originally published on TechCrunch