Samsung is gaining by cutting prices on high-end devices like the Galaxy S6 but also faces fierce competition at the low-to-middle end of the smartphone market
Without revealing actual shipment numbers, Samsung said it saw a “significant increase” in smartphone shipments in Q3.
However, it said that revenues were hurt by price cuts for its Galaxy S6 and S6 Edge devices, as well as furious competition at the lower end of the smartphone market.
The Korean tech giant reported third quarter operating profit of 7.39 trillion won on revenues of 51.68 trillion won.
Overall revenue increased 6pc quarter-on-quarter driven by the company’s semiconductor business and the display panel segment.
However, looking ahead to the fourth quarter the company expects earnings to decline.
It said the consumer electronics division will expand sales during the year-end peak season and it will strive to maintain solid earnings from the IT and mobile division through the growth of Galaxy Note 5 sales and by improving the profitability of flagship smartphones.
Software and silicon bode well for Samsung’s future
It also said the growth of its 14-nanometer foundry business and OLED display sales will help maintain profits.
Samsung also intends to address an area where it has traditionally been weak: software competency.
The company said that on the memory front it expects 2016 to be as strong as 2015. “Samsung plans to strengthen its market-leading position by increasing sales of high value-added products including 20-nm DRAM, 10-nanometer-class NAND, and V-NAND,” the company said.
The company’s smartphone division reported revenues of 26.6 trillion won
“Samsung saw a significant increase in sales of smartphones in the quarter, compared with the second quarter, with increased shipments of Galaxy Note 5, Galaxy S6 Edge+ and the Galaxy A and J series.
“However, due to the price adjustment of Galaxy S6 and Galaxy S6 Edge, and increased shipments of mid-to-low-end smartphones, revenue increased slightly whereas profit decreased quarter-on-quarter.
“Large-screen smartphones released in the quarter are receiving positive feedback from markets and they are expected to exceed the shipments reached by their predecessors.
“As for tablets, the company expects shipment volume and revenue to be similar to last quarter’s,” the company said.
Samsung smartphone image via Shutterstock
