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Samsung’s Q2 Profits Miss Estimates, Chinese Competitors Held Responsible

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Samsung, the world’s largest manufacturer of smartphones has posted its Q2 profit that missed analyst estimates on competition from Chinese makers and gains in the Korean won, Bloomberg reports. The Korean tech giant has however said that newer products and increasing demand for its displays will boost results in the third quarter.

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Back in June, Samsung’s Chief Financial Officer Lee Sang Hoon had predicted in a statement that the company’s forthcoming earnings announcement may be “not that good” and it appears he was right. The company saw its operating income fall about 24% to 7.2 trillion won ($7.1 billion) in the three months quarter ending June, which marks its third straight quarterly drop. The Korean smartphone maker is now counting on demand for fourth-generation devices to revive growth.

“Samsung earnings will rebound in the third quarter, largely driven by explosive demand for 4G smartphones in China,” Claire Kim, a Seoul-based analyst at Daishin Securities Co. said by phone. “If Samsung can maintain at least 20 percent market share in that segment, it will see higher smartphone sales during the quarter when the significant impact from Apple’s new devices isn’t yet expected.”

“We see some concerns in the second half of the year as Apple is set to launch iPhone 6 device with larger screen size,” Marcello Ahn, a Seoul-based analyst at Quad Investment Management Co., said by phone today. “Manufacturing capabilities of Chinese smartphone makers, such as Xiaomi and Lenovo, have significantly improved enough to even compete well against Samsung’s lower-end smartphone models.”

It is speculated that any move by Apple, which uses a 4-inch display on its current iPhone 5s, would weaken Samsung’s grip on the market for large screen devices with products such as its 5.7-inch Galaxy Note.

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