After Samsung’s sluggish profits in the Q4, with the company’s sales of smartphones falling really short of the earlier estimates in the holiday season. and according to reports that are coming out from market experts the smart phone industry’s slump is going to continue in this quater as well and according to some experts it might never come out of this slump.
The experts have observed that the demand for high end smart phones is waning. High end smart phones, which had been a key component of Samsung’s annual revenue since it started its high end Galaxy series smart phones is now not generating much hype as other more exciting technologies and products are hogging the limelight. This is going to affect the production and sales of displays, semiconductors and other electronic components that are used in high end smart phones.
Samsung itself accounts for a majority of the manufacture of displays, memory chips and other smart phone components which it sells to other companies, including it’s competitor Apple.
Samsung’s operating income was 6.1 trillion won in the three months ended December. Analysts had estimated 6.64 trillion won on average. Quarterly sales did not grow much year-on-year, at 53 trillion won.
Samsung itself acknowledged issues with its business model, saying software and platforms are eclipsing hardware. On a yearly basis, Samsung phone shipments are headed for their second straight annual decline, as tough competition from Apple and the lower-end markets put pressure on it.
On the semiconductor side, Samsung has shifted its focus towards chips and displays, hoping to sell its semiconductor components to more external clients. It has been able to boost chip sales volumes, but the price of memory is falling.
Analysts blame Samsung’s poor performance on waning demand for smartphones as markets mature and China’s economy slows. This slowdown is expected to extend throughout the entire high-end smartphone market, including Apple’s iPhone devices. No recovery in demand is in sight.