Samsung’s smartphone crown slips with company in crisis

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Samsung Electronics is struggling to hold on to its crown as the world’s top-selling smartphone maker, compounding a mounting crisis at South Korea’s largest company.

The Korean tech giant was the only one of the top five global smartphone makers to experience falling shipments in the third quarter of this year, losing market share to longtime US rival Apple and Chinese contenders offering slick new foldable devices.

Samsung’s third-quarter global market share fell from 21 per cent to 18 per cent year-on-year, according to IDC, with its lead over Apple cut to 0.6 per cent. Analysts estimate that its smartphone division’s operating profit dropped by as much as 30 per cent over the same period.

“Samsung’s smartphone business is in the doldrums,” said Park Kang-ho, an analyst at Daishin Securities. “The company hoped that foldable phones would give it an edge over Apple but consumer reaction has been lukewarm. Now Chinese companies are pushing foldables to steal Samsung’s market share.”

Samsung’s 12-year reign as the world’s top smartphone maker by handset sales was ended last year when Apple briefly took the top spot, before the Korean group regained its lead in the first quarter.

However, research group TechInsights expects Apple’s new generative artificial intelligence features to help power the US company past Samsung next year.

“Chinese brands have become much more competitive not just in prices but also in functions,” said a Samsung worker at the smartphone division. “We are concerned about our rivals’ moves and keeping an eye on how the new iPhones perform.”

The Asian company’s smartphone struggles come at a critical point. It has been hit by a series of failures at its semiconductor division, which accounts for 60 per cent of Samsung’s operating profit. The head of the chips unit issued a rare apology this month after falling further behind smaller crosstown rival SK Hynix in the development of cutting-edge memory chips for AI-related hardware.

Observers argue that many of the problems at the conglomerate’s various divisions are interrelated, noting reports that Samsung may be forced to turn to US rival Qualcomm’s mobile application processor chip for its upcoming flagship Galaxy S25 smartphone because of lower yields of in-house Exynos processors. Samsung declined to comment on the reports. The company’s share price is down 27 per cent on a year ago.

“Samsung is facing mounting structural problems in most of its businesses where it used to be dominant, from chips to smartphones and displays, because of its complacency and bureaucracy,” said Park Ju-geun, head of Seoul-based corporate research group Leaders Index.

In the smartphones market, Samsung pioneered foldable devices, but ceded top spot earlier this year to Chinese rival Huawei, which had a 27.5 per cent share of the foldables market in the second quarter, compared with Samsung’s 16.4 per cent, according to IDC.

While foldables only account for 1.2 per cent of the global smartphone market, they constitute the fastest-growing segment of an otherwise relatively stagnant sector.

Huawei also notched up a symbolic victory last month when it released the world’s first “tri-foldable” phone, the Mate XT, which comes with a near-$3,000 price tag.

Honor, another fast-growing Chinese rival, mocked the Korean company at a trade show in Berlin last month by engraving a “micro apology” on its Magic V3 foldable to consumers who had endured Samsung’s “chunkier alternative”.

Samsung is trying to fight back with a slimmer and lighter “Special Edition” Galaxy Z Fold 6 but its delayed domestic launch on Friday was heavily criticised as the new model did not actually appear in stores. Samsung said it could not prepare enough initial volume.

The company added its flagship Galaxy S24 series with AI features, launched in January, has been “warmly received,” exceeding its expectations, adding that Galaxy AI will be accessible on around 200mn Galaxy devices this year.

The key test, analysts said, will be the performance of its Galaxy S25 flagship due out in January, which will have to take on iPhones and Android-powered devices boasting AI features.

Jene Park, an analyst at Counterpoint Research, said: “They really need to show differentiated AI services that can wow people to continue to enjoy the first-mover advantage.”