Samsung Electronics Co is expected to unveil its next smartphones this weekend, with the focus on whether they can draw customers from Apple Inc. The real question might be whether the phones can pull customers from Qualcomm Inc and Sharp Corp.
The Galaxy S devices are aimed at demonstrating Samsung can make top-tier chips and screens, as well as smartphones. The company is using its own application processor chips in the phones, replacing those from Qualcomm, and its own multisided screen, something no rival can produce. The goal is to create customers for those products, even if it loses ground in phones.
Samsung is at risk of losing its leadership in smartphones after four years atop the industry. The company fell into a tie with Apple in the fourth quarter of last year, and earnings have dropped for three straight quarters. Samsung is pouring more than US$21 billion into capital expenditures this year to grab a bigger slice of revenue from the 1 billion handsets sold by rivals.
“It’s a great chance to lure more customers,” Counterpoint Technology Market Research Ltd research director said Tom Kang said. “If the S6 sells well, many handset rivals will adopt a ‘me, too’ strategy with Samsung’s new chips and curved displays.”
Shares of Samsung fell 1.3 percent to 1.36 million won (US$1235.39) in Seoul yesterday, paring this year’s gain to 2.3 percent.
Asia’s biggest electronics company wants more of the combined US$51 billion in revenue generated by sales of application processors and screens for mobile phones. Qualcomm captured more than half of the US$21 billion processor market last year, according to Strategy Analytics.
Samsung plans to release two versions of its new high-end smartphone tomorrow during the Mobile World Congress in Barcelona, with one model featuring a display on three sides, people with direct knowledge of the matter have said.
Both phones are expected to have all-metal bodies and use Samsung’s applications processors instead of Qualcomm’s Snapdragon, the people said. Analysts expect the devices to use the S6 name. The company also hinted at new ways to charge the phone without cords.
Seho Park, principal engineer at Samsung’s mobile unit, predicted “users will be able to enter a new wireless world like never before” with future Galaxy models.
New features are key for helping Samsung stand out in a mobile market where Apple earns the biggest profit and dozens of companies, including Xiaomi Corp, use Google Inc’s Android software to produce seemingly interchangeable phones.
Revenue from Apple’s iPhone and iPad totaled US$60.2 billion in the quarter ending on Dec. 27 last year, while revenue from Samsung’s mobile division, including tablet computers, was US$22.9 billion in the quarter ending Sept. 30 last year, according to data compiled by Bloomberg.
“Samsung has fallen into a ‘one of the Androids’ category and it’s getting harder to get people to open up their wallets,” Dongbu Securities Co Seoul-based analyst Yoo Eui-hyung said. “The performance of S6 will be the key selling point for Samsung’s mobile components.”
Samsung’s ascent to the top of the global smartphone industry in 2011 drove record earnings, yet the 40-year-old division making logic and memory chips is now the biggest contributor to profit. That includes semiconductors made for its own phones and those for Apple and Sony Corp.
Operating profit at the chip division surged 36 percent to 2.7 trillion won in the fourth quarter, while mobile phone unit earnings slumped 64 percent to 1.96 trillion won.
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