Samsung follows Apple's suit with big smartphone production cut of its own

Samsung follows Apple's suit with big smartphone production cut of its own
After contracting in 2020 due to the abrupt start and devastating initial consequences of the coronavirus pandemic on the supply chain and general global customer demand, the smartphone market grew slightly last year but couldn't quite match (let alone exceed) the sales figures registered in 2019... or 2018... or 2017.

While the world's top handset vendors naturally entered 2022 with the expectation that both demand and production would finally return to the mobile industry's pre-pandemic levels, all signs seem to be pointing in the opposite direction of late.

According to Canalys, Q1 smartphone shipments slipped 11 percent compared to the same period of 2021 "amid unfavorable economic conditions", and at least as far as Apple and Samsung are concerned, the outlook for the rest of the year is certainly not rosy based on the latest rumblings from parts suppliers, pundits, and insiders.

Trouble ahead for the Galaxy S22 family?

Although this new Korean media report (translated here) doesn't actually mention any Samsung devices by name, it's hard not to think first and foremost of the S22, S22+, and S22 Ultra when hearing that the company is viciously cutting its production goals "not only for mid- to low-end models but also for flagship (high-priced mobile phone) models."

At least for the time being, the three aforementioned Snapdragon 8 Gen 1 powerhouses are the chaebol's leading representatives of the latter group, and while one of them was widely deemed a big commercial hit shortly after its release, that initial popularity may have faded in recent weeks.

"Global high prices" and the Russian invasion of Ukraine are named as two key causes of this pretty serious crisis that could materialize in roughly 30 million fewer Galaxy handsets being manufactured in 2022 compared to Samsung's original target.

While the tech giant obviously can't do anything about the latter cause, the rapidly declining demand of the last few months might explain the deeper and deeper recent price cuts of the Galaxy S22 Ultra.

The mid-range Galaxy A53 5G also happens to be cheaper than you may have expected, and the same could soon be true even for the low-end Galaxy A13. Of course, although we have no reason to doubt this crisis is real and problematic for Samsung's bottom line, its smartphone production objective for 2022 remains sky-high, at anywhere between 270 and 280 million units.

Nothing to worry about on the foldable front

If that newly rumored range of 270 to 280 mil ends up materializing, it's unfortunately safe to assume that Samsung's actual sales numbers will dip from 2021's estimated total of 272M. 

That's because the market-leading brand is believed to have produced around 300 million smartphones overall last year, so assuming that gap will remain largely unchanged, we can expect Samsung's global shipment tally to stand at roughly 245 million units in 2022.

A 10 percent or so volume decline is definitely bad, regardless of "unfavorable economic conditions", Eastern European wars, and returning COVID-19 lockdowns in Asia impacting the supply chain, but for what it's worth, foldable sales are still projected to grow from 13 to 18 million units.

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In the grand scheme of things, the prospective success of this year's Galaxy Z Flip 4 and Z Fold 4 may not sound particularly impactful... yet, but in the long run, foldables could become paramount for Samsung's overall growth potential.

High-end foldable devices might even help Samsung distinguish itself from Apple, which initially revised its production plans down this year due to the low popularity of the mid-end iPhone SE 3 while reportedly looking at problematic demand for at least certain members of the iPhone 14 family in the months ahead. Bottom line, Samsung and Apple's issues are similar but different, signaling however pretty much the same systemic challenges for the smartphone market as a whole.

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