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Samsung Electronics is struggling to maintain its position as the world’s top-selling smartphone maker, and the crisis for South Korea’s largest company is deepening.
The South Korean tech giant was the only one among the world’s top five smartphone makers to see a drop in shipments in the third quarter of this year, compared to long-time U.S. rival Apple and China, which offers sleek new foldable devices. Lost market share to competitors.
According to IDC, Samsung’s global market share fell to 18% in the third quarter from 21% a year earlier, narrowing its lead over Apple to 0.6%. Analysts estimate that the smartphone division’s operating profit fell by up to 30% over the same period.
“Samsung’s smartphone business is sluggish,” said Park Kang-ho, an analyst at Daishin Securities. “The company was hoping that foldable phones would give it an edge over Apple, but consumer reaction was slow. Now, Chinese companies are pushing foldable products to steal market share from Samsung. ”
Samsung’s 12-year reign as the world’s top smartphone maker by unit sales ended last year when Apple briefly took the top spot, before the South Korean group regained the top spot in the first quarter.
But research group TechInsights expects Apple’s new generative artificial intelligence capabilities to help strengthen the US company beyond Samsung next year.
An employee of Samsung’s smartphone division said, “Chinese brands have become much more competitive not only in price but also in functionality.” “We are concerned about what our competitors are doing and are keeping an eye on the new iPhone’s performance.”
The company’s smartphone struggles in Asia are reaching a critical stage. Samsung has been hit by a series of failures in its semiconductor division, which accounts for 60% of its operating profit. The company’s chip division chief issued an unusual apology this month for falling further behind smaller urban rival SK Hynix in developing cutting-edge memory chips for AI-related hardware.
Observers have cited reports that Samsung may be forced to use U.S. rival Qualcomm’s mobile application processor chip in its next flagship smartphone, the Galaxy S25, due to declining yields of its Exynos processors. They point out that many of the problems in the various divisions of conglomerates are interconnected. Samsung declined to comment on the report. The company’s stock price is down 27% from a year ago.
“Complacency and bureaucracy have left Samsung facing mounting structural problems in most of its once-dominant businesses, from chips to smartphones to displays,” said the leaders of a Seoul-based corporate research group.・ Index CEO Park Ju-geun says. .
In the smartphone market, Samsung was a pioneer in foldable devices, but lost its top spot to Chinese rival Huawei earlier this year, according to IDC. Huawei had a 27.5 percent share of the foldable device market in the second quarter, compared to 16.4 percent for Samsung.
Foldable devices make up just 1.2% of the global smartphone market, but they constitute the fastest growing segment in a relatively stagnant sector.
Huawei scored a symbolic victory last month when it launched the world’s first “tri-fold” phone, the Mate XT, priced at nearly $3,000.
Another fast-growing Chinese rival, Honor, announced at a trade show in Berlin last month that its foldable Magic V3 is offering “microscopic features” to consumers who have put up with Samsung’s “chunkier alternatives.” “Apology” was engraved on it, ridiculing the Korean company.
Samsung is trying to fight back with a slimmer, lighter “special edition” Galaxy Z Fold 6, but Friday’s domestic launch delay was heavily criticized as the new model wasn’t actually in stores. Samsung said it was unable to prepare sufficient initial quantities.
The company added that its flagship Galaxy S24 series, which launched in January and is equipped with AI features, has been “warmly received” beyond expectations, and that around 200 million Galaxy devices will have access to Galaxy AI this year. added.
Analysts say a key test will be the performance of its flagship Galaxy S25, which is scheduled to be released in January and will need to compete with iPhones and Android devices equipped with AI features.
“To continue to enjoy first-mover advantage, we need to demonstrate differentiated AI services that wow people,” said Gene Park, an analyst at Counterpoint Research.
