Samsung suppliers see profit and sales plunge following weak Galaxy S21 sales

Samsung suppliers see profit and sales plunge following weak Galaxy S21 sales
The Galaxy S21 is one of Samsung’s worst-selling flagships ever and that poor performance has started to impact suppliers across the globe, a new report out of South Korea claims.

Operating profit is down over 70% since 2019 for Samsung suppliers

The Elec is reporting that while the performance of Samsung’s smartphone component suppliers improved in the second quarter compared to 2020, numbers are down significantly from two years ago.

The 20 Samsung suppliers that were analyzed reported combined sales of KRW 2.53 trillion in the second quarter of 2021 and a total operating profit of KRW 162.4 billion, with an average operating margin of 6.4%.

Overall sales declined 13.1% compared to the second quarter of 2019 and operating profit is down 72% in the same period, with the poor performance of Samsung’s Galaxy S21 models believed to be the main cause.

Of course, shutdowns as a result of the COVID-19 pandemic and ongoing global chip shortage have had an impact too, though these haven’t affected all suppliers equally like the poor Galaxy S21 demand has.

For reference, combined shipments of the Galaxy S21 series reached 13.5 million units in the first six months of availability. That’s down from 17 million Galaxy S20 units and a whopping 25.5 million Galaxy S10 shipments.

A lack of mainstream flagships means the second half of 2021 won't be any better

As for the second half of 2021, The Elec believes there won’t be a significant improvement to the financial situation of Samsung suppliers, with that being attributed to the lack of mainstream flagship models.

The Galaxy Z Fold 3 is priced at $1,799 in the US, meaning it’s far from a mainstream product. The compact Galaxy Z Flip 3 starts at $999, though its relatively new form factor again limits its appeal.

The brand will have the Galaxy S21 FE available later this year, however it’ll be priced as a budget flagship, which means lower profit margins compared to pricier products for both Samsung and its suppliers.

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