Samsung Profits Tumble as Apple Enters Large-Screen Phone Market and Low-End Options Thrive

Samsung's third quarter 2014 earnings are likely to disappoint as the company faces intense competition from both high-end and low-end competitors, even as Apple's newly launched iPhone 6 and 6 Plus are just starting to roll out. According to the Wall Street Journal, Samsung is expected to announce a quarterly operating profit drop of up to 62 percent in what may be its fourth consecutive quarterly decline.

galaxy-s5-mini
Though it may see a marginal increase in smartphone shipments, Samsung's operating profit decline may be the result of lower handset selling prices and increased marketing costs as smartphone competition escalates.

Samsung’s smartphone business is facing intense competitive pressure at the low-end from Chinese handset makers, and at the high-end from the iPhone. With the iPhone 6, Apple essentially wiped out Samsung’s distinguishing feature: a big screen size. And with the jumbo iPhone 6 Plus, Apple has now entered into the “phablet” segment that Samsung pioneered.

While its mobile device division struggles, Samsung's components business is expected to increase 10 percent over the coming year, accounting for more than 40 percent of operating profits in 2015.

One of Samsung's main component customers is Apple, although the iPhone maker has cut back significantly on its usage of Samsung parts. One major move away from Samsung came with the main A8 chip used in the iPhone 6 and 6 Plus, with Apple turning to TSMC for the first time for chip production. Some industry sources believe Samsung to still be producing a portion of A8 chips, but so far it does not appear any have been seen in teardowns of the new devices.

Top Rated Comments

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76 months ago
Steve jobs would definitely have allowed this
Score: 150 Votes (Like | Disagree)
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76 months ago
Just more proof that gimmicks in phones and attack ads just aren't working anymore.
Score: 91 Votes (Like | Disagree)
Avatar
76 months ago
PANG!

I said this before....there you go Samesung!

this is the main reason that bendgate went viral.

suck it Samesung! :apple:
Score: 73 Votes (Like | Disagree)
Avatar
76 months ago
Couldn't have happened to a more deserving company.

If Samsung had stuck to providing parts for other OEMs and done their own *original design* phones, they would not be in this spot right now. They may have missed some of their highs, but they would have had a solid, long term, sustainable business.
Score: 69 Votes (Like | Disagree)
Avatar
76 months ago
They should make a 10 minute commercial about this.
Score: 66 Votes (Like | Disagree)
Avatar
76 months ago
Now their profit is what their commercials were.


Pretty low.
Score: 65 Votes (Like | Disagree)

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