Samsung's Q2 2022 Profits May Decline Due to Competition, Lack of Innovation

Samsung trounce the market expectation in Q4 2017 when the company raked in approximately $14 billion in operating profit, and and so repeated the feat of surpassing expectations by netting effectually $14.49 billion as operating profit in Q1 2018. However, new predictions from analysts suggest that the company is on course to record the smallest growth in its quarterly operating profit in over a year, thanks to the underwhelming sales of the premium Galaxy smartphones.

According to a report from Reuters, despite running a highly profitable chip business, the disappointing smartphone shipment figures accept taken a toll on Samsung's cumulative operating profits, only that's only one of the many reasons pain the Korean giant'south finances.

Samsung's Q2 2018 Profits May Decline Due to Competition, Lack of Innovation

Analysts take predicted that Samsung'south smartphone shipments will drop in the Apr-June quarter, primarily because consumers are gravitating towards cheaper and much better-specced offerings from Chinese brands such every bit Xiaomi. Moreover, a lack of technological innovation in the domain of smartphones is what is pulling away customers from Samsung, with a prime example being Apple with the Face ID engineering science, and Chinese companies similar Xiaomi, Oppo, and Vivo which keep experimenting with new ideas.

"Functions (that) Samsung's mobile phones accept are not bonny plenty for customers to spend more money on", Song Myung-sup, an analyst at HI Investment & Securities was quoted as maxim by Reuters. Analysts have fabricated an example out of Samsung's Galaxy S9 flagship, which despite offer top-of-the-line specs, lacks in the department of innovation and does non offer something truly unique.

As far every bit raw financial figures are concerned, Samsung is expected to bring in $xiii.3 billion equally operating profit in Q2 2018, which amounts to a reduction of around a billion dollars compared to the operating profit recorded in the previous ii quarters.

A Counterpoint analyst added that Samsung'southward reliance on traditional distribution channels to sell its smartphones is likewise a drawback, as competitors like Xiaomi have adopted a predominantly online sales model to bring downwardly accompaniment costs and offer devices at competitive prices which undercut Samsung'southward offerings.