Poor Galaxy S9 sales see Samsung profits slip

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Samsung’s profit growth continues to be sluggish as apparently poor sales of the Galaxy S9 offset the strong performance of its component business.

The Korean technology giant told investors to expect sales of around 59tn Won (£40bn) and operating profits of up to 14.9 trillion Won (£10bn) for the second quarter of 2018. 

This is still another record profit for the company, but the mobile unit’s performance is cause for concern.

Samsung smartphone

However, it was not unexpected. Following the publication of its Q1 results in April, Samsung warned investors that slowing sales of flagship models like the Samsung Galaxy S9 and increased marketing costs to address the situation.

In the second half of 2018, Samsung will release a new flagship device – presumably the Samsung Galaxy Note 9 – and new handsets for the mid-range market while also trying to maintain long-tail sales of the Galaxy S9.

It will also continue to invest in its Bixby voice-activated personal assistance in a bid to prove to consumer and investors that it can still innovate.

Samsung is the world’s largest smartphone manufacturers, but a slowdown in smartphone innovation as well as market saturation in more developed markets has led to slowing growth in the premium segment of the market. The one upside is that the average cost of these devices has gone up, something which is also benefiting rival Apple.

Meanwhile intense competition from Chinese manufacturers in the mid-range segment is driving prices down and hampering market share.

According to Gartner’s most recent figures, Samsung has a 20.5 per cent share of the market, ahead of Apple on 14.1 per cent, Huawei on 10.5 per cent and Xiaomi on 7.4 per cent.