The 12-year ‘reign’ in the smartphone industry is fragile
The South Korean tech giant was one of five global smartphone makers to see shipments decline in the third quarter of this year, losing market share to longtime rival Apple and Chinese rivals.
According to IDC, Samsung‘s global market share in the third quarter increased from 3% to 21% over the same period, the gap ahead of Apple being only 18%.
Analysts estimate that the operating profit of the company’s smartphone division fell by 30%.
“Samsung’s smartphone business is stagnating” said Park Kang-ho, an analyst at Daishin Securities. “The company hopes foldable phones will give it an advantage over Apple, but consumer response has been lukewarm. Now, Chinese companies are ramping up production of flip phones to gain market share. »
Competitors are narrowing the smartphone market share gap with Samsung. Source: IDC
Samsung’s 12-year reign as the world’s leading smartphone maker by sales ended last year, when Apple temporarily took over the top spot, before the South Korean conglomerate regained the top spot in the first quarter of this year.
However, research group TechInsights said Apple’s new artificial intelligence features could help the “house of Apple” surpass Samsung next year.
In addition, mainland competitors are also on the rise. “Chinese brands have become much more competitive, not only in terms of price but also in terms of functionality. » » said a Samsung employee in the smartphone department.
Samsung has been a pioneer in the foldable phone segment, but ceded the top spot earlier this year to Chinese rival Huawei, which had a 27.5% share of the foldable phone market in the second quarter, compared to 2% for Samsung, according to IDC.
Samsung has lost the number 1 position in foldable smartphones to Huawei. Source: Counterpoint Research
Even though foldable phones represent only 1.2% of the global smartphone market, they are the fastest growing segment in a relatively stagnant industry.
An even bigger delay in semiconductor manufacturing
The Asian company’s difficulties in the smartphone segment come at a critical time. The company has been hit by a series of bankruptcies in its semiconductor division, which accounts for 60% of Samsung’s operating profits.
The head of the chip division issued a rare apology this month after falling further behind smaller crosstown rival SK Hynix in developing advanced memory chips for AI-related hardware .
“Samsung faces growing structural problems in most of the industries it once dominated, from chips to smartphones and displays, due to complacency and bureaucracy,” he added. said Park Ju-geun, director of Seoul-based economic research group Leaders Index.
The Korean company is also far behind TSMC in terms of capitalization. Photo: Bloomberg
Observers believe many problems in different parts of the company are linked to each other, noting that Samsung may be forced to use mobile chips from rival Qualcomm on the upcoming Galaxy S25 flagship lineup due to a Exynos internal processor output lower than expected.
In early October, the company admitted delays with its latest generation HBM chip, shortly after SK Hynix announced it had begun mass production.
Meanwhile, competitor Micron Technology Inc. is also stepping up its efforts in the HBM space and has reported strong demand for its products.
Investors are selling Samsung shares. Photo: Bloomberg
Samsung is “losing technological leadership in the semiconductor sector”, said Young Jae Lee, senior investment director in London for the high dividend team at Pictet Asset Management.
“In essence, it is very difficult to regain technological leadership in the short term. » he said, adding that the company had reduced its stake in Samsung.
Samsung is promising an overhaul to regain its competitiveness, but investment fund managers such as Pictet Asset Management and Janus Henderson Investors SP do not believe any change is imminent.
Foreign investors have sold about $10.7 billion of the Korean company’s shares on a net basis since the end of July.
(Selon FT, CNBC, Bloomberg)
Business in decline, Samsung set to undergo major staff reshuffle Korea Herald sources revealed that Samsung Electronics will carry out a major staff reshuffle at the end of this year, with the layoff of around 30%. administrators.
