Samsung Electronics Co. (005930) projected a bounce back in sales following a poor second quarter profit due to heightened competition from Chinese manufacturers and the appreciation of the Korean won. Nevertheless, Samsung expects new offerings and surging demand for displays to boost third-quarter results, a company statement read.
The second quarter saw an approximately 24 percent dropdown in operating income to 7.2 trillion won ($7.1 billion). This was the third straight quarterly decline for the Suwon, South Korea-based tech giant.
Anticipated demand surge for fourth-generation devices could trigger a growth spurt for Samsung. The firm faces fierce competition from premium customer-attracting tech behemoth Apple Inc. (AAPL), and Chinese producers Xiaomi Corp. and Lenovo Group Ltd. (992), known for their feature-rich, budget-friendly phones. The impacts of currency oscillations have devalued overseas earnings while intensifying competition in the market for screens larger than 5 inches, especially with Apple’s rumored larger iPhone releases.
Seoul-based Daishin Securities Co. analyst, Claire Kim, holds an optimistic view for a Samsung earnings boost in the third quarter, primarily fuelled by soaring demand for 4G smartphones in China. Only Apple’s new devices’ considerable impact could potentially rock this prediction.
Despite the reported operating profit and a declining analyst expectations trend sparking some investor unease, Samsung share prices did register a slight increase, but they have not yet compensated for the year’s previous loss.
Samsung posted approximately 52 trillion won in gross sales for the quarter. With the launch of their new smartphone series, the tech giant cautiously expects a positive third quarter, and do not anticipate significant marketing expenses in the coming quarter.
Samsung remains tight-lipped on net income specifics or earning details per division, set to undergo auditing and reporting later.
Despite the intense competition from Chinese manufacturers, Samsung’s Galaxy S5 achieved a commendable 10 million units sale within just 25 days of its global launch. The telecommunications division, contributing more than 70 percent to Samsung’s earnings, likely made an operating profit of 5.1 trillion won from 31 trillion won sales. Although Samsung’s total smartphone shipments saw a dip, they anticipate a rebound backed by the burgeoning 4G smartphone market in China.
Analysts warn of possible concerns in the year’s second half for Samsung with Apple’s larger screen size iPhone 6 launch looming as a considerable threat. Also, Chinese smartphone players like Xiaomi and Lenovo have significantly upped their game, which could threaten Samsung’s less expensive smartphone models.
Alongside sluggish tablet computer sales, Samsung is also gearing up for another competitive frontier in the larger screen market as Apple’s suppliers in China commence mass production of larger iPhones, up to 5.5 inches.
Interestingly, Samsung’s display unit, the market leader for organic light-emitting diode screens, reported a near 76 percent fall in operating profit from the previous year.
In contrast, Samsung’s consumer-electronics segment, responsible for TV and home-appliance businesses, expects a profit increase as a result of aggressive marketing of new TV sets with ultra-high-definition and World Cup hype in Brazil. Furthermore, the Samsung chip unit’s profit, which supplies its own devices including rivals like Apple, approximately doubled.
This article was updated in 2025 to reflect current trends and insights.
Paul Balo is the founder of TechBooky and a highly skilled wireless communications professional with a strong background in cloud computing, offering extensive experience in designing, implementing, and managing wireless communication systems.
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