Do you know who else has Apple's profit margins? Hint: it's not Samsung


Looking at the world's largest phone makers that are actually turning a decent profit, we can only see three companies at the helm - Apple, Samsung and the Chinese juggernaut Huawei. Granted, Samsung reported almost $13 billion in profit last quarter, Apple banked with about $11 billion, while Huawei only makes do with half of this number, but when it comes to its smartphone business, its profit margins seem to be on par with Apple, as you can see from the infographic above, while Samsung is trailing them both.

A few years ago, Huawei's CEO made the flamboyant claim that they will be moving upmarket, and chasing Apple's share of the pie, which at the time caused a few condescending snickers. Its flagship phones, however, quickly rose up, both in features, and in price, until they regularly crossed the $600 mark. This has apparently resulted in quite the healthy margin of 42% retained value for the brand, or as much as Apple keeps. 

Samsung, on the other hand, is much more generous with the distribution discounts it gives to retailers, as this is the only number that differs by a lot in the graph here. In fact, a major Indian phone distributor complained recently that


Other big Chinese brands like Oppo, and Samsung itself, are known to give incentives in the realm of 12-15% for distributors, which is double or triple what Apple doles out to distributors. Notice what other company has Apple's "distribution and retail" margins? Yep, you guessed, it, Huawei. Even though the number of $600+ phones that Huawei sells pales in comparison to Apple or even Samsung, the 3.6 million units of those it moved in the first half of 2017 is more than Sony, and almost what LG sold. 

Coupled with the Apple-style vertical integration (like homebrew Kirin chipsets), and disciplined selling and administrative costs, Huawei has proved to be a high-end phone maker to keep an eye on as it is emerging as the powerful underdog, and its latest handsets like the Mate 10 Pro only came to confirm this notion. They are good, expensive, and the US is the only market where Huawei hasn't gained a firm foothold just yet, but will apparently keep on pushing. "The U.S. is a very important market to us," said Huawei's spokesperson back in September. "As long as we have good products, it is only a matter of time before the U.S. market opens up." Analysts like Counterpoint’s Richardson seem to agree, too:



source: WIP (PDF report), ET & Forbes

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19 Comments

1. haruken

Posts: 306; Member since: Nov 06, 2013

Wawei has always been a scam, no surprise here.

4. Tech-shake

Posts: 213; Member since: Nov 14, 2016

Wait so they are a scam because they know how to make profit while making decent products and selling them at a decent price ?

9. irossdrummer

Posts: 369; Member since: Jan 17, 2015

They made a Nexus that was pretty nice so i don't see how they could be a scam

2. TerryD

Posts: 546; Member since: May 09, 2017

What is the profit margin that Samsung make on the screens they sell to everyone else?

5. worldpeace

Posts: 3133; Member since: Apr 15, 2016

Profit compared to what? screen's raw materials? Then the profit is huge. But Samsung spent Billions to make manufacturing plant, so the profit is different here

6. ShadowSnypa786

Posts: 573; Member since: Jan 06, 2017

All it shows is that Samsung spends more on materials than anyone else. It gives more discounts to retailers. So basically Samsung give more and they make less profit? While others pay less for materials, give less disocunts and make more profit. Samsungs distributions are better for customers you get what ya pay for. Apples and Huawei's are better for the companies.

17. MrShazam

Posts: 987; Member since: Jun 22, 2017

Exactly! One of the major reasons why I had no problem paying a lot for my 256GB Exynos Note 8; it makes up for that price difference by offering a lot more uses compared to the competition.

13. KingSam

Posts: 1449; Member since: Mar 13, 2016

Huawei makes a lot of components in house. No surprise here.

15. worldpeace

Posts: 3133; Member since: Apr 15, 2016

HTC should take note

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