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Samsung's Q2 earnings forecast proves to be true, sees 1.9% drop in handset sales

Samsung's handset market share has dropped in the first half of 2014, however it gained in other sectors such as TV, memory, and display panels.
August 18, 2014
samsung-komt-met-12-inch-tablet-in-oktober-samsung-logo-3 Last month Samsung released a Q2 earnings warning in which it said that it was experiencing a slowdown in overall smartphone market growth, mainly due to increased competition in the Chinese and some European markets. According to new numbers released today, that forecast has proven to be completely accurate.

Despite gains in its TV, memory and displays businesses, Samsung saw a decline in handsets sales and a reduction in its global market share during the first half of 2014. Samsung’s bi-annual business report has revealed that the world’s largest smartphone maker saw its global presence in the handset industry drop to 24.9 percent for the first six months of the year. That is a 1.9 percent drop from a year earlier. Overall the company is thought to have shipped some 223.69 million units during Q1 and Q2.

Analysts are citing the slowdown in handset sales as the main reason for Samsung’s reduced Q2 profits which dropped by a massive 19.5 percent to 6.25 trillion won (US$6.11 billion) from a year earlier. The company is expecting better sales during Q3, once the Galaxy Note 4 has been released.

Samsung did better in its TV business where it saw a 2.4 percent increase in market share, compared to last year. The increase, which is mainly due to the demand in Ultra HD TVs, means that Samsung now has a 24 percent share of the global TV market. During the first half of the year Samsung  sold 26.5 million TVs which means it should sell over 50 million units by the end of the year. For 2013 the company sold some 47.5 million TVs.

Samsung’s memory and display panels businesses also faired better than its smartphone business. The company’s global DRAM market share is now 38.9 percent, up 2.7 percent from 36.2 percent in 2013. Its display panels market share came to 21.6 percent in the first half of the year, up 1.2 percent. In the business report Samsung said its plans for long-term growth include a continued focus on high-end displays, including flexible ones.

What do you think? Why is Samsung’s market share decreasing?