Struggling Samsung returns focus to components as Apple iPhone eclipses Galaxy phone sales

“Samsung Electronics Co. is relying on a 40-year-old memory-chip unit for earnings growth as sales of its Galaxy smartphones are eclipsed by Apple Inc. and Xiaomi Corp.,” Jungah Lee reports for Bloomberg.

“The world’s biggest mobile-phone business, under pressure at the high end from iPhones and in the mid-range from Xiaomi’s Redmi 2, contributed less than a third of earnings, according to analyst estimates,” Lee reports. “Vice Chairman Lee Jae Yong is leading a strategy revamp by cutting the number of smartphone models, spending $15 billion on a new chip plant in South Korea and reinventing the company as a maker of Web-connected devices.”

“‘Samsung’s main business is now shifting back to semiconductors,’ Peter Lee, a Seoul-based analyst at NH Investment & Securities, said in a Jan. 2 report. The annual operating profit from the chip business this year will outpace that of the mobile unit, he said,” Lee reports. “Operating income at the phone division probably fell to 1.6 trillion won on sales of 27 trillion won, according to the analyst survey. That would be the unit’s smallest quarterly profit in almost four years… In November, Samsung said it would cut the number of smartphone models it produces by as much as a third this year to focus on products where it has a competitive edge. That’s a reversal of its previous strategy of selling devices for anywhere between $100 and $1,000 across multiple screen sizes.”

Read more in the full article here.

MacDailyNews Take:

Thermonuclear
Thermonuclear.

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18 Comments

    1. Real question is when Google loses control over Android by one method or another?

      Can Google really keep developing Android forever? Is there enough advertising advantage? Will in app adds and search in custom search engines obviate the need for Googles broad based search?

      I myself rarely use Google. Too many non-relevant results pop up even with restricted searches.

  1. Funny thing is their TV business has seen a whopping 30% decline……even though its offering in that space is not too shabby. I put that down to people like me who refuse to buy any Samdung TV’s.

    If I was to add up all the Samdung stuff that I would NORMALLY have purchased, it would amount to more than $10K. And that is a low estimate.

    1. Agreed. I bought two new HDTVs last year, and I wanted to avoid Samsung even though their flat screens are pretty highly rated. I ended up finding an LG model for a very good price. It felt great to shun Samsung at the product level, even though their electronic components are probably part of nearly everything.

      1. I encourage all friends and family to avoid any and every product that is Samsung branded. Saved my in-laws from buying a Samsung washer / dryer set year before last, and it felt good to take away that sale from those lying, stealing goobers.

          1. Proudly boycotting Samsung since 2013

            Why so late? Bought my first brand new Apple device in 2012, I was not aware about the history.

            greetings from Eastern Europe

  2. Very happy and extremely satisfied that Scamsung is and will probably continue to struggle with its smartphone sales. But I now loathe to see the new thief on the block: Xiaomi.

    These guys seem worse than Scamsung. I feel like we’ve finally dealt with the old school T800, only to turn the corner and confront a fresh faced, more sinister T1000. May they never, ever succeed outside of China…

    1. Ciao I is already seeing blow back from countries outside China like India where they are blocking sales of products. Might be the future of shameless copiers.

      Will be interesting.

  3. Many are happy to see Samsung slide into oblivion. But the real shame is that the legal system failed to set clear and useful precedent in protecting Apple’s Intellectual Property (including design) against blatant rip-off by Samsung (Google, too). The legal system should have protected Apple’s IP better. And Samsung should have hit the skids a lot sooner.

    Consequently, other rip-off artists will not be deterred, and we have not established legal precedent to prevent other copycats and ripoff artists from stealing innovative companies’ IP. This is Samsung’s real legacy: it exposed the medieval workings of our impotent legal system in protecting innovative IP.

    The US legal system: The lights are on, but nobody’s home.

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