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What is the future of the Samsung mobile phone market? Aug 02, 2018

"Nikkei Business News" reported on August 2 that South Korea's Samsung Electronics' smartphone business has cast a shadow. The April-June 2010 consolidated financial report released on July 31 showed that Samsung’s smartphone division’s operating profit was 2.67 trillion won, a 34% decrease from the same period last year. According to recent data from the survey company, Samsung has slipped to the second place in the Indian market, and its market share in China has fallen below 1%. Samsung is striving to make a comeback through the "folding screen" smartphone, but the outlook is not clear.

Samsung Electronics' sales in April-June were 58.48 trillion won, a decrease of 4% from the same period of the previous year, while operating profit increased by 6% year-on-year to 14.87 trillion won. The sales of semiconductor memory are relatively strong to ensure the gain, but the mobile phone and screen business have entered a hard battle, and the operating profit has decreased by 5% compared with January-March.

In the mobile phone field, the flagship model "Galaxy S9", which was launched in March-June in March, was lower than the Galaxy S8 in the previous year. By the end of 2018, global sales are estimated at 3,000 million. The S8's sales in 2017 are about 20% lower than the market forecast, which is close to 40 million. In the context of consumers moving away from high-end smartphones, the situation of S9 is even more severe.

There are signs in advance. US research firm IDC said that Samsung's global share for October-December 2017 (by sales) was 18.9%. It was the lowest level since the October-December period (17.9%) in which Samsung was struggling due to a mobile phone fire accident. The top spot was taken by the American Apple.

The downturn in China and India in key smartphone markets has had an impact. In China, it accounted for more than 20% of the market share, but recently encountered a fierce attack by Chinese manufacturers such as Huawei Technologies. The Korean newspaper "Korean Daily" reported that the market share in October-December 2017 was below 1%.

According to IDC, Samsung Mobile has maintained a 25% market share in India during the January-March period of 2018. However, China's millet, which has grown to 30% market share, has surpassed it and slipped to second place. The low-end models that are popular in the Chinese and Indian markets also seem to have a sluggish performance.

The operating profit of Samsung's "IT & Mobile" division, which is centered on the smartphone business, has also decreased by more than 30% in five quarters. The business profit of this business exceeded 20 trillion won per year in the most prosperous period. Compared with the highly volatile semiconductor business, it was regarded as a "superior student" who can bring stable income, but it is now in a state of stagnation.

"Samsung's competitors are Apple, Xiaomi and so on don't care," a Samsung related person said in the spring of 2017. In order to catch up with Apple's high-yield system, how to improve brand influence, Samsung's smartphone department only put Apple in the eye.

But the Chinese manufacturers that have been scorned today have shaken Samsung's fundamentals. A South Korean securities analyst believes that "Samsung has a lack of research and development in improving the speed of China's smart phone quality." The history of Japanese manufacturers who once despised the rise of Samsung and suffered a reversal seems to be staged again.

Samsung is not sitting still waiting for it. According to relevant sources, in order to launch the Foldable smart phone "Foldable" in 2019, Samsung is currently promoting research and development. It is said to be released at the Spanish mobile phone exhibition in February 2019. It is said that it is highly probable that a 7.3-inch folding screen will be used.

If the new-generation communication standard "5G" is put into use, "there will be new uses, and the popularity of high-performance models will recover" (Samsung officials) are also expected. KT, a large Korean communications company, plans to offer 5G enterprise commercial services starting in March 2019.

Samsung is equipped with cutting-edge components such as organic EL panels on its own smartphones, and has been better at driving the growth of the semiconductor and display sectors. If the stagnation of the smartphone business is going to be long-term, it may also bring uncertainty to the growth strategy of Samsung's entire company.