Samsung posts first profit decline in more than two years

7 Jan 2014

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In its continuing battle with Apple, among others, Korean tech giant Samsung has posted its first profit decline in nine quarters of business.

With the launch of Apple’s iPhone 5c and 5s towards the end of last year, it was expected that Samsung’s stake in the market would take a hit but at what level was open to speculation.

However, Samsung announced today there has been a profit decline of 6pc on the previous year, with an operating profit of 8.3tn won (€5.7bn).

While facing stiff competition from its American rivals, Samsung has also been significantly challenged in the Asian market by Chinese budget smartphone manufacturers like Huawei and Lenovo, as well as the Taiwanese HTC, which has made huge strides with the release of its flagship model the HTC One.

Reliant on smartphones

Samsung has become increasingly reliant on the success of the smartphone element of its business. Despite announcing a new range of Galaxy TabPro and NotePro tablets at CES 2014, the company’s earnings from smartphones makes up almost two-thirds of its overall sales, a worrying reliance in an increasingly competitive market.

Despite launching a series of new televisions, including the much-publicised bendable 4K TV, its screens and processor divisions have been stagnating financially.

Another serious challenge to Samsung’s position in Asia will begin on 17 January, when Apple will begin selling its line of phones through China Mobile, officially the world’s largest mobile network with more than 760m subscribers.

Apple has previously had agreements with both China Unicom and China Telecom for the iPhone, but their market share was significantly lower than China Mobile’s.

Outside of its largest competitors, Samsung lowered its own profits when it announced that to mark the 20th anniversary of its chairman, Lee Kun-hee, $1bn worth of bonuses would be distributed to employees.

Colm Gorey is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com