Samsung plans to focus on cheaper smartphones and flexible displays for high-end phones after its third-quarter profit plummeted by nearly 50% amid intense competition from Chinese rivals making low-cost handsets.
The low-end smartphone market is still growing rapidly, and the company aims to exploit the opportunity by improving cost competitiveness, said Kim Hyun-joon, the head of the company’s mobile communications segment said during an earnings conference call. Samsung also aims to differentiate its high-end products with flexible displays and new materials such as metal frames.
The world’s largest smartphone maker saw its market share drop to 23.8% in the third quarter from 32.5% a year ago, while Xiaomi rose to the third place after second-ranked Apple, according to IDC.
Samsung’s net income fell 49% to 4.2 trillion Korean won (€3 billion) in the July to September period from 8.2 trillion won a year ago. Operating profit dropped 60% to 4.1 trillion won compared with 10.2 trillion won a year ago. Revenue was 47.45 trillion won, in line with an earlier guidance report.
“Tough competition leaves some uncertainties in our smartphone business for the Q4 earnings,” Robert Yi, Samsung’s head of investor relations, said during the earnings conference.
Samsung sold 102 million handsets and 10 million tablets in the quarter, and a similar level of shipments is expected in the fourth quarter, Yi said. Samsung shipped 79.2 million smartphones in the period, according to Strategy Analytics.
Korean rival LG, the world’s fourth-biggest smartphone vendor, sold a record 16.8 million devices in the quarter, taking a 5% global share, according to Strategy Analytics. Brisk demand for LG’s flagship G3 phone boosted overall shipments in the third quarter, LG said.
Analysts earlier noted that an estimated inventory of 40 million Galaxy smartphones in sales channels is worrisome as it is an indication of the growing appeal of rival, high-quality Android devices on the market.
Samsung’s semiconductor business was one ray of light in the earnings results as memory chip sales rose about 24% to 7.9 trillion won in the quarter from a year earlier. Samsung said early this month it would invest about $15 billion to build a chip manufacturing plant in Pyeongtaek, south of Seoul.
IDG News Service
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