Tencent Technology News, March 17 According to foreign media reports, Samsung's latest flagship smart phones Galaxy S9 and Galaxy S9+ will be listed this week, but this Korean electronic giant is likely to face the most difficult year in recent years.
In 2017, Samsung’s mobile division continued to grow despite the overall downturn in the market, and the main credit should be the Galaxy S8, because this smartphone is significantly different from its predecessor. At the same time, in the semiconductor market, due to the imbalance between supply shortages and strong demand, pushing up product prices has helped Samsung surpass Intel to become the world's largest chip maker.
More importantly, Apple also purchased a large number of OLED panels from Samsung in order to produce the iPhone X, further increasing the profits of Samsung Electronics. The final result is that Samsung's share price rose by 41% in 2017.
However, the current problem is that the situation in 2017 will not re-emerge in 2018. Investors' attitude toward Samsung has become more cautious. We can see from the current stable Samsung stock price.
First, according to research firm Gartner's data, smart phone sales fell 5.6% in the fourth quarter of last year, which is the first decline in the entire smart phone industry from 2004 to now. The period of use of smart phones has become longer and the price of products has gradually increased. Some models even exceed US$1,000. Many consumers think that it is not necessary to spend too much money on smart phones.
In addition, the competition in the smart phone market is fierce year after year. Samsung not only faces Apple's challenges, but also has a lot of pressure from China's competitors, including Huawei, Xiaomi, OPPO and Vivo. These Chinese manufacturers' products, while offering top-level configuration, are much lower in price than themselves. In a key smart phone market like India, Xiaomi also took Samsung to the throne in the fourth quarter of last year and became the largest mobile phone manufacturer in the Indian market.
On the other hand, the revenue growth of the semiconductor market last year was 22.2%. After entering 2018, the growth rate in this area has slowed down significantly. Considering that semiconductor business accounted for most of Samsung's profits last year, this is a problem that cannot be ignored.
Finally, Apple may purchase OLED panels from Samsung’s competitor, LG, also from South Korea’s electronics giant, to reduce its reliance on Samsung. This is also a hit for Samsung.
All of these factors add up to make Samsung's fate in 2018 appear uncertain. But in addition to unfavorable factors, Samsung also has some good news, mainly depends on how Samsung to control their own destiny.
In February of this year, Samsung released its new flagship Galaxy S9 and Galaxy S9+, of which the Galaxy S9+, which costs $839.99, has also become one of the most expensive smartphones on the market. This price may deter many people. However, Samsung now allows consumers to "trade-in" and use old mobile phones to offset some purchases. For example, the Galaxy S8 and iPhone X can offset $300, and the Galaxy S7 can offset $200. So even if you use a two-year product, you can get a good discount. This move may prompt a group of Galaxy S7 users to choose to upgrade to S9.
In addition, according to the IHS data, Samsung’s current flagship usage rates are Galaxy S7 and Galaxy S7 Edge, both of which were launched in 2016 with a market share of 5.26%. The Galaxy S6, which was launched in 2015, and the earlier generation of the Galaxy S5 are also very popular. Although the S9 looks very similar to the S8, it has significantly improved compared to these old flagships, which can help Samsung release some of the pent-up market demand.
Analysts from Counterpoint Research predict that sales of the Samsung Galaxy S9 will be close to 43 million in 2018, exceeding the 35 million sales of the Galaxy S8 in 2017.
On the contrary, these older mobile phone users may choose the latter after seeing similarities between the Galaxy S9 and the S8, because the price of the S8 is now lower, which will also affect Samsung Mobile’s revenue and profits. So the Korean electronics giant must find a way to allow users to see the difference between the Galaxy S9 and the S8.
For Samsung, the semiconductor business is extremely important. Although the market growth may not be as rapid as last year, Gartner's data shows that the market size this year is still $45.1 billion, which is 7.5% higher than last year.
Counterpoint Research's data shows that the prices of DRAM and NAND flash memory chips are all rising. This is the main product type of Samsung. This is good news for Samsung. Although the researchers pointed out that Samsung’s semiconductor market revenue will decline slightly in the first quarter of this year, Samsung’s response is the key to solving the problem.
2018 was a year after Samsung's glory. So for this Korean electronics giant, this year's road is harder to go than it was last year.