Samsung Electronics records revenue growth, but anticipates smartphone market slowdown in 2016

Samsung Electronics records revenue growth, but anticipates smartphone market slowdown in 2016

Just as promised, Samsung Electronics announced its financial results for the third quarter of 2015, ended September 30. The company posted $45.6 billion (KRW 51.68 trillion) in consolidated revenue and $6.42 billion (KRW 7.39 trillion) in operating profit. The results correspond with company projections and analyst estimates that we've been covering throughout October. Revenue saw an approximate 6% quarter-on-quarter increase, driven primarily by Samsung's semiconductor and display panel business.

However, the company foresees a decline in the fourth quarter, due to a negative foreign exchange rate, slower demand for memory chips, and weak supply and demand for LCD panels. Moreover, the smartphone market's growth rate is expected to slow down continuously in 2016, which will prompt Samsung to further streamline its product line-up, enhance its premium handsets, and explore its Samsung Pay mobile payments system and wearable devices (such as the Gear S2) as areas of growth potential.

Although smartphones aren't Samsung Electronics's "meat-and-potatoes" products quite like memory chips are, the company did see a "significant increase" in handset sales compared to Q2, with increased shipments of its recent Galaxy Note5 and Galaxy S6 Edge+ premium phablets, along with its affordable Galaxy A and J series. Samsung's latest large screen smartphone have received positive market feedback and are expected to exceed their predecessors' shipments. Alas, the post-launch price decrease introduced to the Galaxy S6 and S6 edge, along with the increased shipments of mid-to-low end smartphones, led to profit decrease. However, the elevated shopping demand toward the end of the year could improve revenue in the fourth quarter. Tablet shipments could liven up as well, on the back of new orders for the Galaxy Tab S2 and A series.

The significance of Samsung's flagship handsets stretches far and wide across the company's structures. The technological innovation and launch preparation involved in building its Galaxy S phones drives demand and production improvements in its memory chips, application processors, CMOS image sensors, and OLED panels. As the latter have proven very successful for Samsung, both technologically and sales-wise, the company is looking to expand its OLED business with new products, such as transparent and mirror displays.

With this into account, Samsung expects solid earnings from its electronics division, owing to the growth of its 14nm foundry and OLED panel divisions. With a projected 14 percent year-over-year investment increase in its semiconductor and display facilities, Samsung Electronics will focus on strenghtening its leadership in V-NAND and DRAM memory production, as well as streamlining its LCD panel business.

With Samsung's predictions of the smartphone market slowing down next year, it will be interesting to see what its less established Android handset competitors will do to sustain themselves over what could turn out to be another year of dismal flagship sales. Not many of them have other sustainable businesses to rely upon, neither they have the same resources for reinforcing their premium products with agressive technological innovation and marketing budget. Hopefully, smaller players like HTC and Sony will find solid strategies of improving their market share, or at least holding onto it for another 12 months.

Samsung Electronics records revenue growth, but anticipates smartphone market slowdown in 2016

source: Samsung

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18 Comments

1. Heisenberg

Posts: 366; Member since: Feb 11, 2015

I'm the first here

2. manojmcn

Posts: 633; Member since: Jul 16, 2015

Please observe a 2 minute silence for micro SD and removable battery fanatics!

14. TSMan2

Posts: 363; Member since: Aug 20, 2015

Bet on that S6/Note 5 were sold mostly to US . Where Apple tells them what they need and what they don't need. And where ppl pay only $2/300 with contract. Other ppl don't listen Apple much. And when pay full price $900 they don't want handicap phones,

3. carlemillward unregistered

It is because they always say they are going to cut down on models in Q1 but come Q3 they release multiple series and variants. Galaxy A3, A5, A7, A8, A9, E5, E7, J1, J2, J3, J5, J7, O5, O7, S6, S6edge, S6edge+, Z1, Z3. Rebranded S5 neo, S4 mini value edition, grand max core prime, note 5 And lets not forget their tablets. Tab A, E, 3, 4 S2, View...

5. cripton805

Posts: 1485; Member since: Mar 18, 2012

Yep. i dont even know what I'm looking at anymore.

7. manojmcn

Posts: 633; Member since: Jul 16, 2015

So what? No company, except Apple, can sell 84.5 million smart phones in a quarter by having 1 or 2 falgships. Samsung is smart enough to provide most options at different price points, so as to keep the fight to the low cost chinese phones.

8. carlemillward unregistered

Having more than 20 is ridiculous, at most 12 is more understandable.

10. tech2

Posts: 3487; Member since: Oct 26, 2012

They have cut down their phone releases this year significantly. According to gsmarena they released altogether 62 phones and 27 tablets in 2014 While, 38 phones and 10 tablets in 2015. That's a pretty drastic cutback IMO. Albeit 2015 isn't over but there are hardly more releases in Nov and Dec. What makes you think you're smarter then a company which turns over Stop speaking from your ass. 'at most 12 is more understandable' on what analysis you came to that conclusion. What makes you think you are smarter then a company which makes 25 bill a year ?

11. tech2

Posts: 3487; Member since: Oct 26, 2012

Edit: $7 Billion dollar

15. manojmcn

Posts: 633; Member since: Jul 16, 2015

Lol, ridiculous for whom? They make money on lot of these. S, Note and A are more of global variants; the others get a lot of region specific flair based on the market needs. One example is the J1,J2, J5 & J7 series selling well in India, China. It's not available in developed & richer countries.

9. Clars123

Posts: 1072; Member since: Mar 16, 2015

not all of these came out this year..most of the A and E series smartphones came at the end of 2015

12. carlemillward unregistered

Yes, I know, but A5II and A7II will probably be released in Nov/Dec.

4. hanabi

Posts: 177; Member since: Oct 08, 2015

$6.4B profit seems all right I think it's about time to acknolege Samsung mainly as a semiconductor company like Intel

13. carlemillward unregistered

It seems that the same can be said about Sony. Seems that nobody is doing well with Android. ( ͡° ͜ʖ ͡°)

17. manojmcn

Posts: 633; Member since: Jul 16, 2015

Sony is mostly a Camera sensor company. Samsung is much more and diversified and cannot be labelled to one vertical.

6. BATTERY_LIVES_MATTER

Posts: 106; Member since: Sep 01, 2015

Not everyone can afford a flagship smartphone year after year. Largely why the iPhone 6s has been readily available to walk in to a store and buy since the second week of avaiability.

18. jeroome86

Posts: 2314; Member since: Apr 12, 2012

Just got my ordered 6s Plus this past Monday. Every where was sold out.

16. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

Yet the other stupid PA writer tried to claim SAMSUNG profits had nothing to do with phone sales

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