Samsung’s mobile sales drop in Q4 as it battles Apple’s iPhone 12



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Samsung introduced its new Galaxy S21 range earlier than usual.

Sarah Tew / CNET

Samsung benefited in the fourth quarter from strong demand for technologies that help people during the pandemic – like televisions – but its mobile business couldn’t compete with the news. IPhone 12 range.

The South Korean giant said on Wednesday that its overall fourth quarter revenue rose 2.8% from a year earlier, but its mobile service sales fell 11%. The results contrast with Samsung’s main rival, Apple. The iPhone giant earlier Wednesday recorded its highest turnover in its history, benefiting from growing demand for its new iPhones. Apple’s mobile business revenue jumped about 17% from the previous year.

Samsung said its mobile revenues had fallen due to “increased competition during the year-end season” and that its mobile profits suffered from higher marketing costs. Its display business, meanwhile, posted its highest profits in its history, with Samsung selling more panels for more expensive smartphones and TVs.


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Going forward, Samsung expects its Galaxy S21 lineup, which it introduced this month at a $200 lower starting price than the Galaxy S20, to boost its results in the first quarter. And the “upcoming release of new mass-market products will also contribute to the growth in the first quarter.” Still, its companywide profit in the first quarter likely will be lower as a stronger Korean won hurts its memory chip business. Samsung also expects to be hurt by costs associated with new production lines for its processors, despite “solid” demand for memory chips in mobile devices and data centers. 

For the full year, Samsung expects its mobile business to benefit from its efforts to “strengthen leadership in [its] flagship line by expanding sales of the S21 and popularizing the foldable category, “which probably includes lower the prices of its Galaxy Z Flip and Z Fold devices. Samsung said it will “also increase smartphone sales by fully meeting the demand to replace 5G with mainstream 5G models.”

“In 2021, market demand is expected to return to pre-COVID levels thanks to a gradual recovery in the economy and an acceleration in the expansion of the 5G market,” Samsung said in a press release. Still, he warned that “uncertainties persist over the possibility of recurrence of COVID-19 waves.”

In October, Samsung warned that the fourth quarter would be weaker than the third as server customers bought fewer memory chips. He also said tougher competition from smartphones would hurt his bottom line. Apple, in particular, was a tough rival to Samsung at the end of 2020. Apple introduced four new iPhones during the quarter, all with 5G connectivity.

Like its competitors, Samsung is grappling with the coronavirus pandemic and its impact on consumers. When COVID-19 started to spread, concerns about the disease led to a dramatic slowdown in phone purchases as people around the world decided the device they owned was good enough. Demand eventually picked up when new 5G phones started to hit the market, but not soon enough to boost sales of Samsung’s Galaxy S20.

Pandemic demand

Computers and televisions have been hot items with people stuck at home, and home appliances are purchases consumers can only put off for so long. Samsung has benefited from the growing demand for all of these products, as well as its components that provide memory storage for data centers and consumer devices. In October, Samsung posted its highest quarterly turnover on record, thanks to “a significant increase in consumer demand” for its smartphones, computers and other products.

Apple’s entry into the 5G phone market with its full iPhone 12 lineup in October likely hurt Samsung in the last quarter of the year. By the end of 2020, Samsung had launched around 20 5G phones, but there were no compelling reasons consumers needed them. People are keeping their devices longer than ever before, and the first 5G devices were expensive. Apple introduced 5G on all phones in its iPhone 12 line without raising the prices of its Pro models. And he even introduced a cheaper iPhone 12 Mini to more price-conscious people.

Apple on Wednesday said its iPhone business generated $ 65.6 billion in sales, up more than 17% from the $ 56 billion reported last year. And this despite that some iPhone models are still difficult to find since their arrival on the market in October. Each of Apple’s other companies grew at double-digit rates as well, showing how people turned to its entertainment, health and education products throughout the year as they adapted. to life in the pandemic.

The pandemic, meanwhile, has forced Samsung to change strategy for some of its mobile products, including introducing a cheaper model of the Galaxy S20, called the S20 FE. And it held its Galaxy 21 launch in mid-January, about a month earlier than normal. The most noticeable difference from last year’s Galaxy S20 lineup is the lower price, each model sells for $ 200 less than its predecessor. The company hopes the lower price will help it attract buyers who have delayed upgrading their devices.

Samsung’s fourth quarter results will not benefit from these devices, which hit stores on Friday.

For the fourth quarter, Samsung said its operating profit rose 26% to 9.05 billion Korean won ($ 8.2 billion) as the company benefited from demand for its displays and memory chips. . And it said revenue of 62.55 billion Korean won ($ 56.4 billion), up slightly from 59.88 billion Korean won a year ago.

Samsung said in early January Expected to Report Q4 Q4 Operating Profit of 9 Trillion Korean Wons ($ 8.2 billion), up from 7.16 trillion Korean won ($ 6.5 billion) a year ago, but below the 12.4 trillion won level in the third quarter. The fourth-quarter amount was about half a trillion won less than analysts expected, according to a Bloomberg poll. Samsung said at the time that its sales would rise to 61 trillion Korean won ($ 55.8 billion) from 59.9 trillion Korean won ($ 54.7 billion) in the fourth quarter of 2019.

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