Samsung expects significant profit decline due to increased smartphone competition

Samsung expects a decline in quarterly profit of 60 percent compared to last year. The decrease is mainly attributable to poorer results of the smartphone division. Samsung faces increased competition from cheap smartphones and iPhones.

The quarterly profit fell by 59.7 percent to 4.1 trillion won in the past quarter, or 3 billion euros, Samsung expects. It would be the strongest decline for the Korean group since 2009. Quarterly sales fell by just over 20 percent year-on-year.

Samsung attributes the decrease to poorer results of the mobile division and the consequences for the OLED branch and the chip business. The amount of delivered smartphones still grew somewhat, but increased marketing costs and lower prices for the devices had a negative impact. Samsung sold relatively fewer high-end devices like the Galaxy S5, on which the company makes more profit, and older models received sharp price drops.

Samsung faces fierce competition in Apple’s high-end market, while a huge amount of cheap Android devices from Chinese manufacturers appear at the bottom of the market. Samsung says the results will improve with the arrival of “new lineups with new materials and innovative designs”, while the company will also release new midrange and low-end devices “competitive in hardware specifications and price”.