Apple Foldable Stuns Samsung Amid Memory Surge
The competition to seize dominance in the global smartphone market is escalating into an unpredictable battlefield. With Apple shaking the barriers of the foldable phone market, which Samsung Electronics has firmly defended, by introducing its first foldable phone, the ‘iPhone Duo,’ a warning light
As the global smartphone market intensifies its competition, Apple has entered the foldable phone arena with its first device, the "iPhone Duo," challenging Samsung Electronics' long-held dominance. This new entrant has set a challenging precedent for Samsung, as it grapples with a surge in memory prices, a critical component. Despite being a latecomer and commanding a price tag of over $2,419, the "iPhone Duo" has drawn a massive initial response, with nearly 100 pre-orders at the Apple Myeongdong store on Oct.
23, leading to supply shortages. Experts predict Apple will produce around 6 million units of the "iPhone Duo" this year, pushing it to second place in the foldable phone market share.
However, Apple's rapid success is not without its challenges. Reports of display damage in some units raise concerns about product quality, a factor that could impact the company's future in the market. In response to these pressures, Samsung Electronics has opted to reduce its smartphone production volume in the fourth quarter of the year by about 20% compared to its initial plans, a strategic move to protect its profitability.
This move comes as memory supply shortages have worsened, with memory manufacturers focusing on producing AI products like High Bandwidth Memory (HBM). Consequently, the price of DRAM for smartphones has surged by over 70% in the second quarter, placing a significant cost burden on smartphone manufacturers.
Apple, too, has had to adjust its initial production volume, but the situation remains challenging for Samsung Electronics, which is striving to hold onto its top position in the smartphone market. The competition between the two tech giants shows no signs of easing as they vie for the global number one spot, with neither willing to relax their guard. While Samsung Electronics reclaimed the top spot in the second and third quarters of this year, the market share gap with Apple remains narrow, just a 1% point difference.
Amidst these challenges, the smartphone industry is adopting strategies such as price increases and focusing on premium lineups. Samsung Electronics has raised the factory prices of its major smartphones by 100,000 to 200,000 won, but the limits to improving profitability are evident. Despite its record-high operating profit of over 107 trillion won in the third quarter of the year, the MX division, responsible for the smartphone business, is expected to face a loss of over 1 trillion won.
Consequently, Samsung is concentrating its efforts on premium product lines, such as the Galaxy S series and the foldable Galaxy Z series, which have relatively low price sensitivity, rather than low-to-mid-range lineups with lower profitability, like the Galaxy A series. The Galaxy Z8 series, launched in August, has seen a 45% increase in European sales compared to the same period last year, potentially serving as a vital lifeline for Samsung in defending its profitability in the fourth quarter, an off-season.
As Chinese manufacturers like Xiaomi and Huawei struggle with cost pressures and reduce shipments, the competition for hegemony in the premium smartphone market between Samsung Electronics and Apple is expected to become even more intense.
Written by urgent.news from BusinessKorea's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
