Galaxy Smiles Amid Huawei Smartphone Slump

Achieved 4 Trillion KRW Operating Profit in IM Division After 3 Years
3Q Smartphone Shipments Increased by 23 Million Units
Shipment Growth Closely Linked to Huawei's Weak Performance
Huawei Phone Shipments Expected to Halve Next Year

[Asia Economy Reporter Han Jinju] Samsung Electronics' smartphones are benefiting from Huawei's shipment slump. With Huawei's shipments potentially halving next year, this is a golden opportunity for smartphone shipments to rebound.

According to industry sources on the 9th, Samsung Electronics' IM division, which is in charge of the smartphone business, is expected to post operating profits exceeding 4.5 trillion won in the third quarter. Recording operating profits in the 4 trillion won range is the first time in about three years. The operating profit in the previous quarter was 1.95 trillion won, so this is an increase of over 2 trillion won.

The surprise performance of the IM division in the third quarter stemmed from increased shipments of smartphones and tablets, which is also related to the sanctions on Huawei. The U.S. government designated Huawei as a restricted trading company, causing difficulties in procuring smartphone components and making a decline in smartphone shipments inevitable. Samsung Electronics' smartphone shipments in the third quarter are expected to reach 80 million units, an increase of 23 million units from the previous quarter, and tablets are expected to increase by 3 million units to 10 million units.

Song Myungseop, a researcher at Hi Investment & Securities, explained, "The performance increase due to Huawei sanctions began in the third quarter, and the shipment increase reflects the impact of the slump of Huawei, the biggest Android competitor. Samsung Electronics is likely to be the competitor that takes the largest market share from Huawei."

According to Market Pulse by market research firm Counterpoint Research, Samsung Electronics overtook Huawei to take first place in smartphone market share in August. Samsung (with a 20% share), which had lost the lead to Huawei by a 1% margin since April due to declining smartphone sales, succeeded in widening the gap with Huawei. The market share in August was Samsung 22%, Huawei 16%, Apple 12%, and Xiaomi 11%.

Huawei's outlook for next year is even bleaker. There are forecasts that shipments could be halved. Strategy Analytics (SA) predicted that Huawei's smartphone shipments will sharply drop from 192 million units this year to 59 million units next year. SA analyzed, "Huawei's smartphone market share could plummet from 15.1% this year to 4.3% in 2021 after using all its stockpiled chipsets." There are also reports that Huawei postponed the release of its foldable phone within this year due to difficulties in panel supply.

With Huawei's momentum, which fiercely chased Samsung and threatened the top spot until the second quarter, weakening, there is also analysis that the duopoly of Samsung and Apple will be strengthened. SA forecasted Samsung Electronics' smartphone shipments to reach 265 million units this year and 300 million units next year. Apple is expected to ship 192 million units this year and 236 million units next year. SA predicted, "In the Chinese market, flagship models will be replaced by Apple and Samsung Electronics, and overseas, Xiaomi, Oppo, Vivo, Apple, Samsung Electronics, and LG Electronics will benefit."

This content was produced with the assistance of AI translation services.