Samsung Electronics' smartphone division is projected to report losses for two consecutive quarters, while Apple continues to show strong performance. Both companies face rising costs due to soaring memory prices, but their financial outcomes diverge based on their product mix and pricing strategies.
According to industry sources, Samsung's Mobile Experience (MX) and Network Division is estimated to incur an operating loss of around 1 trillion won in the third quarter of this year. This follows the company's first-ever quarterly loss in the second quarter, marking two consecutive quarters of losses. Despite an increase in sales of high-end products like the Galaxy Z series, rising component prices have pressured profitability.
Samsung's semiannual report indicates that the purchase price of mobile memory surged by approximately 211% in the first half of this year compared to the annual average last year. In contrast, the average selling price (ASP) of smartphones rose by only about 7%, indicating that the increase in component costs was not sufficiently reflected in selling prices.
On the other hand, Apple is expected to maintain solid performance in the fourth quarter of this year. The company has projected its revenue guidance for the fourth quarter of the 2026 fiscal year to be between $111.69 billion and $113.74 billion, representing a 9-11% increase compared to the same period last year. In the previous third quarter, Apple achieved record sales of $109.42 billion.
Despite Samsung expanding its market share in the global smartphone sector, its profitability has reportedly worsened. According to Counterpoint Research, Samsung's shipment market share in the third quarter of this year rose to 23%, up 4 percentage points from 19% in the same period last year. Apple also increased its share from 18% to 22%.
The disparity in performance between the two companies is particularly evident in their selling prices. In the second quarter of this year, Apple's smartphone ASP reached $946, approximately 3.5 times that of Samsung's $270. While Apple's ASP increased by 8% year-on-year, Samsung's remained stagnant. In terms of revenue share, Apple led with 49%, significantly ahead of Samsung's 16%.
The profitability gap between the two companies is attributed to differences in product composition and pricing power. Samsung has secured a shipment advantage with a wide range of products from mid-range to premium, but its ASP falls short of one-third of Apple's. The mid-range products, which have a higher sales proportion, must compete with Chinese manufacturers targeting price-sensitive consumers, making it difficult to fully pass on rising component costs to selling prices. Even with increased sales volume, the profit per unit remains limited.
In contrast, Apple maintains relatively high selling prices based on its premium iPhone-centric product lineup and strong brand loyalty. Although both companies face common cost pressures, Apple has more flexibility to reflect these in its selling prices.
Thus, Samsung's poor performance cannot be solely attributed to rising component prices. Factors such as supply chain management, marketing costs, and profitability management for individual products also play crucial roles in determining performance. Maintaining a strategy focused on mid-range products to boost sales volume may increase profitability pressures during periods of rising costs. Experts suggest that rather than merely pursuing growth in volume, Samsung should focus on increasing the proportion of high-value products and enhancing cost management to improve its profit structure.
* This article has been translated by AI.
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