Samsung’s meteoric profit growth slowed in the last three months of 2013 as sales of the flagship Galaxy S4 slowed under pressure from the launch of the new iPhone 5s as well as rumours of an imminent replacement looming large. While profits still grew by 5.4%, it was the smallest such growth since 2011 by the South Korean electronics giant. Analysts have attributed the decline in growth to a combination of pressure at the top end of the smartphone market by Apple’s iPhone as well as at the lower end of the market by cheaper phone built by Chinese manufacturers Huawei and Lenovo.
The weakness of the US Dollar against South Korea’s Won also worked against Samsung as the lucrative earnings from North America translated into a smaller profit in Samsung’s home currency. Samsung’s biggest earning division, the mobile unit responsible for smartphones and tablets, saw a 19% drop in operating income compared to the three months prior. While Samsung’s Galaxy S4 was dominating the iPhone 5 in sales during the third quarter of last year because of customers holding out for the release of the iPhone 5s, roles have reversed now with Samsung fans waiting to see what the Galaxy S5 will hold before they make a decision.
Samsung is expected to announce a drastically updated version of its flagship Galaxy smartphone within the next two months as it seeks to regain its momentum in the lucrative high end smartphone market. In response to cutomers who complained about a lack of innovation from the Galaxy S3 to the S4 the head of the mobile division, Lee Young Hee, acknowledged “that consumers couldn’t really feel much difference between the two products from the physical perspective” and that Samsung would be aiming to rectify this with the S5.
The news for other Samsung division was also rather dismal with the consumer-electronics division, which makes TVs, and the display division , which makes the displays for smartphones, both showing drops in revenue. One of the only positives was the chip division which supplies memory chips to the likes of Apple increasing its profits on the back of supply constraints in the market after a competitor’s factory bunt down.