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.”
