Intense competition in the smartphone market, particularly in China thanks to Apple’s iPhone 6, has led to Korean tech giant Samsung reporting an 11pc fall in revenues and a 27pc fall in profits for the fourth quarter.
For the fourth quarter Samsung reported a profit of US$4.9bn, down 27pc on a year earlier and less than a third of the US$18bn that rival Apple reported earlier this week.
The company reported revenues of US$48.6bn, down 11pc from a year earlier.
Profits from Samsung’s mobile division fell over 64pc from a year earlier to US$1.8bn.
Samsung sold 95m handsets in the fourth quarter out of which between 71m and 75m were smartphones.
Rival Apple sold 74.5m iPhones in the same quarter, up 46pc.
Samsung’s semiconductor business helped to buoy up the company’s profits.
Either way it is the fifth consecutive quarter of revenue decline for Samsung and the first quarterly profit decline in three years.
It appears that Apple’s strategy of managing its supply chains tightly and manufacturing fewer devices that yield a higher margin is paying massive dividends while Samsung struggled this year with excess inventory and lower than expected demand for its products.
Samsung neck-on-neck with Apple in race for supremacy in the smartphone world
According to the latest research from Strategy Analytics, global smartphone shipments grew 31pc annually to reach a record 380 million units in the fourth quarter of 2014. Apple tied with Samsung to become the world’s largest smartphone vendor.
Apple shipped 74.5 million smartphones worldwide and captured a record 20pc marketshare in Q4 2014, increasing from 18pc a year earlier.
Apple’s new iPhone 6 and 6 Plus models are proving wildly popular in China, United States and Europe. Apple tied with Samsung to become the world’s largest smartphone vendor for the first time since Q4 2011. Samsung shipped 74.5 million smartphones worldwide and captured 20pc marketshare in Q4 2013, dipping from 30pc in Q4 2013.
Samsung continues to face intense competition from Apple at the higher-end of the smartphone market, from Huawei in the middle-tiers, and from Xiaomi and others at the entry-level. Samsung may soon have to consider taking over rivals, such as Blackberry, in order to revitalise growth this year.
Samsung remained the number one smartphone player globally on a full-year basis in 2014.
Samsung image via Shutterstock