Business
Samsung’s Q2 profit raised by 38%, thanks to strong chip demand
Samsung has been doing quite well over the past year despite the COVID-19 pandemic. Today, the company remained to see a 38% increase in profits for the April-June quarter due to strong prices and demand driven by a pandemic-led consumer electronics and investment returns on data centers.
The profitability of the world’s largest chipmaker and smartphone maker is likely to exceed 11.3 trillion won ($10 billion). The strong performance of the South Korean technology company comes despite shipping fewer smartphones than it did in January-March and the demand for finished chip storage technology with full production capacity.
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Talking about the prices of DRAM chips, which are widely used on servers, mobile phones, and other computer devices, jumped 27% compared to the March quarter, while those of NAND flash chips operating in the data storage market increased by 8.6%, according to research provider Trendforce.
Profits have also improved in Samsung’s chip-contract and logic chip design business, in part because the operations of its storm-hit Texas industry have returned to normal, analysts say. They estimate that the chip division’s operating profit in April-June increased by about 22% from last year to about 6.6 trillion winners.
However, Samsung smartphone shipments dropped by 59 million in April-June from 76 million in the first quarter, as sales declined with its latest model, launched in mid-January.
The declining demand from India, which has been hit hard by the epidemic quarterly, and the tight supply of other chip processor processors are also likely to affect shipping, analysts say, estimating the mobile phone business’s operating profit of about 2.9 trillion winners.
Apple leads the worldwide smartphone market, while India’s Fire-Boltt managed to surpass Samsung in the first quarter of 2023. To proceed ahead, it’s important to mention that there’s no comparison between smartwatches manufactured by Samsung and Fire-Boltt. Here’s why:
Types of smartwatches:
- HLOS smartwatch: Smartwatch running a high-level OS, such as Watch OS (Apple) or Wear OS (Samsung), with the ability to install third-party apps.
- Basic smartwatch: Smartwatch running a lighter version of an OS, with no ability to install third-party apps.
Counterpoint Research recently published its market analysis of the worldwide smartwatch market. The data revealed that Apple continues to lead the smartwatch market, while India’s Fire-Boltt surpassed Samsung for the first time in terms of numbers.
Apple
In the first quarter of 2023, Apple’s shipment volume fell 20 percent year on year. As a result, the company’s market share dropped to 26 percent, which was 32 percent in the first quarter of 2022.
Fire-Boltt
For the first time, Fire-Boltt surpassed Samsung, resulting in ranking second on the global market. The Indian brand has approx 3x shipments increment compared to the previous year with 57 percent growth QoQ.
Samsung
Samsung secured an incredible 15 percent shipments increment in key market North America, but a decline from other markets made it lose the runner-up position on the chart. The company’s global shipments declined by 21 percent QoQ and 15 percent YoY.
Huawei
Huawei’s shipments in China declined by 14 percent YoY, but it has increased shipments in India, LATAM, and MEA, limiting its overall decline in global shipments to 9%.
Samsung owns the largest slice of the global smartphone market share, with rivals in 2nd and 3rd including Apple and Xiaomi, respectively. A recent TrendForce report reveals that Samsung controls about 70 percent (3/4) of the overall foldable smartphone market (with 13 million units shipment).
According to the data, Samsung continues to lead other brands in foldable smartphone market research and production technologies. The company already controls the largest 70 percent piece of the overall market, which would further solidify with the release of Galaxy Z Fold 5 and Flip 5 this July.
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The South Korean tech giant is likely to unveil its next-generation Fold/Flip phones in late July and release to the market in August. The major upgrades are a significantly larger cover display on the Flip 5 and a new waterdrop hinge technology on the Fold 5.
The research agency predicts market size falling short of 1.2 billion units. However, it is estimated that foldable phones’ shipments will reach 19.8 million units in 2023, marking an impressive YoY growth rate of 55% compared to 12.8 million units last year.
Chinese brands like Huawei, OPPO, Vivo, Xiaomi, and Honor have all joined the race for foldable smartphones. Huawei’s Pocket S, released in 2022, has seen a warm reception in the consumer market, thanks to its appealing design and competitive pricing, despite being equipped with a 4G processor.
Last year, Huawei’s market share stood at around 10% and is expected to approach 20% this year. Other Chinese brands hold around 3–5% market share in the foldable smartphone sector. If they can extend their foldable devices into global channels, their sales volumes are expected to rise even further.
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Market research agency Counterpoint Research revealed smartphone shipments in 5 key countries in Southeast Asia in the first quarter of 2023 fell by 13% year-on-year. Among the top five manufacturers in Southeast Asia, Apple was the only one to achieve positive growth, while Samsung was the number one vendor.
Note: Key Southeast Asia countries/markets include Indonesia, Thailand, Philippines, Vietnam and Malaysia.
The report shows that the five Southeast Asian markets including Indonesia, Thailand, the Philippines, Vietnam, and Malaysia were affected by a combination of factors such as sluggish demand and seasonal decline, with year-on-year decreases of 7%, 1%, 10%, 30% and 29% respectively.
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Southeast Asia is at a stage where different consumer types are behaving in a different manners. Low-end smartphone buyers are recovering but they are not just there yet.
Mid-to-high-end smartphone buyers are holding on to their wallets and extending the ownership of their phones, while high-to-premium smartphone buyers are unaffected by the economics of the situation.
Senior Analyst @GlenCardoza writes about Southeast Asia’s five key smartphone markets that declined 13% YoY in Q1 2023.@Apple shined in a declining market with shipments increasing by 18% YoY. @Infinix_Mobile witnessed a 41% increase as the brand grew across SEA markets. While… pic.twitter.com/O648lUQ2C6
— Counterpoint (@CounterPointTR) May 16, 2023
These consumers are going out and choosing to buy the S series, foldables and iPhones. While 5G is becoming a norm, operators are coming out with creative packages and providing options for all types of smartphones.
The coming months are likely to see a bit more improvement in consumer sentiment while governments make sure that their countries remain largely unaffected by global macro issues.
Here’s the data in quick-view format:
- Samsung fell by 16% year-on-year, and its market share fell from 22% to 21%
- OPPO fell by 10% year-on-year, and its market share increased from 19% to 20%
- Vivo fell 26% year-on-year, and its market share fell from 17% to 14%
- Xiaomi fell by 13% year-on-year, and its market share remained at 14%
- Realme fell 5% year-on-year, and its market share increased from 11% to 12%