Samsung Electronics has warned of a significant drop in its fourth-quarter profit, marking its first quarterly decline in two years. The company reported an estimated 28.7% decrease in operating profit, amounting to 10.8 trillion won ($9.8 billion) for the October to December period, falling short of market expectations of 13.5 trillion won. The company’s sales also fell by more than 10% to 59 trillion won.

Samsung attributed the downturn to weakening demand in its memory chip business and intensified competition in the smartphone market, particularly from Chinese manufacturers. The decline in demand from data-center customers led to larger-than-expected inventory adjustments, contributing to a steep drop in chip prices.

The outlook for the first quarter of 2019 remains grim, with Samsung predicting continued challenges in the memory business. However, the company expects a recovery in the second half of the year. Despite this, analysts like Kim Sun-woo from Meritz Securities warn that ongoing structural issues in Samsung’s semiconductor and smartphone divisions could pressure profits throughout 2019.

The warning from Samsung follows a similar caution from Apple, which recently revised its revenue forecasts downward due to weak sales in China and the impact of the ongoing U.S.-China trade war.