Samsung to Launch New Smartphones as Profit Falls

Samsung Electronics Co. had announced its strategy to release two premium smartphones within a half-year timeframe to combat decreasing profit margins and maintain its lead in the mobile phone industry.

However, this proposed plan failed to pacify investor apprehensions, resulting in a drop in Samsung’s stock values. A disappointing earnings report heralded approximately $7.5 billion being shaved off from the company’s market valuation. The second quarter witnessed Samsung’s first year-on-year net profit decline in nearly three years, spurred by escalating competition, especially from Chinese counterparts, affecting its smartphone revenue.

Insights into the new product lineup were provided during an earnings call by the Senior Vice President of Samsung’s mobile-communications department, Kim Hyun-Joon. He mentioned that one of the models would come with a large screen, while the other would be constructed with cutting-edge materials. Although the exact details remained hazy, past statements from the company hint at possible incorporation of flexible screens in their future mobile devices.

Industry observers speculate that the large-screen model could be the newest addition to the Galaxy Note range, traditionally launched by Samsung every autumn. This latest release will likely pit Samsung against competitor Apple Inc., expected to launch its new iPhones around the same time. Samsung also plans to launch a range of low to mid-end models packed with sophisticated features.

Samsung experienced a 20% decrease in net profits, from 7.77 trillion won the previous year to 6.25 trillion won ($6.1 billion). Revenue also saw a slide of 8.9% to 52.35 trillion won, marking the company’s first-ever annual net profit downturn since Q3 2011.

The decline in profits was attributed by Samsung to several factors, including an overestimation of smartphone demand resulting in an inventory surplus, intensifying competition, and fluctuating exchange rates that impacted the international competitiveness of its products financially. Of great significance was a 30% profit plunge in the mobile division, primarily driven by increasing competition from cheaper Android phones and Apple devices. To tackle this, Samsung is intensifying its efforts to produce advanced handsets cost-effectively by investing in research and development and refining its supply chain management strategies. In high-competition regions like China, Samsung has decided to concentrate on a select few models, especially large-screen phones.

In contrast to anticipated shipments of 90 million units, Samsung managed to ship only 74.3 million smartphones during the quarter, despite the launch of the Galaxy S5 flagship model. The company, though, foresees future improvement with the introduction of new flagship products and models later in the year.

Investor disappointment was further fueled by Samsung’s indecisiveness regarding cash pile allocation for investment in semiconductor and component production. The interim dividend, meanwhile, remained unchanged as the company contemplates further investment.

source: Wall Street Journal

Light edits were made in 2025 to improve clarity and relevance.