SEOUL: Samsung Electronics said Friday it expected its fourth-quarter operating profits to plunge 69 percent, as the global downturn causes a sharp decline in demand for memory chips and smartphones.

The South Korean tech giant said operating profits for the October-December period likely slumped to 4.3 trillion won ($3.4 billion), a stinging year-on- year drop from 13.87 trillion won, reports AFP.

Weak demand for memory chips was "greater than expected as customers adjusted inventories... to further tighten finances spurred by concerns over deteriorating consumer sentiment caused [by] continued high global interest rates and weak economic outlooks".

Against that backdrop, the Galaxy smartphone maker "saw a significant drop in the memory business results due to lackluster demand and also weaker sales of smartphones," it added.

It was the first time in four years that Samsung issued an explanatory statement alongside their earnings predictions.

The firm is the flagship subsidiary of the giant Samsung Group, by far the biggest of the family-controlled conglomerates that dominate business in Asia's fourth-largest economy and one that is crucial to South Korea's economy.

The widely expected fourth-quarter drop is the second consecutive margin squeeze for Samsung, which saw a 31.39 percent fall in operating profits in the third quarter year-on-year.

But the global economy is now facing multiple challenges, including soaring inflation, rising interest rates and a growing threat of a broad debt crisis.

The company is expected to release its final earnings report at the end of this month.