Samsung’s mobile phone sales have fallen to their lowest level in five years amid a slowdown in the global smartphone market, intense Chinese competition and the bungled launch of its Note 7 phone.
It was the third consecutive annual decline in mobile sales at Samsung Electronics, the dominant technology arm of the Korean conglomerate, although overall profits rose thanks to a strong showing in its memory chip business.
Samsung was thrown into crisis last autumn when it was forced to recall millions of its high-end Note 7 phones due to faulty batteries, which caused some devices to overheat and catch fire. The incident cost the company billions when it was eventually forced to cease production.
Fourth-quarter results for Samsung Electronics announced on Tuesday showed that mobile revenues fell from 100.5 trillion won (£68bn) to 97.8bn. Although the decline was more subdued than might have been feared, phone sales were at their lowest since 2011.
Mobile sales in the fourth quarter were up slightly on the third, when Samsung felt most of the Note 7 crisis, but were down year-on-year. Operating profits at the telecoms division, which is dominated by mobile phone sales, rose slightly.
Despite the decline in mobile sales, Samsung Electronics doubled overall pre-tax profits in the fourth quarter. It was supported by strong demand for electronic displays and memory chips, with mobile phones making up less than half of the company’s sales for the first time since 2011.
Both Samsung and Apple have been affected by trends sweeping the smartphone market. Growth in shipments were marginal last year as the market became saturated and consumers held onto their devices for longer, while Chinese manufacturers such as Huawei and Oppo have aggressively challenged incumbents. Last year Apple recorded its first decline in iPhone sales since the handset was released a decade ago.
Samsung is looking to revamp mobile phone sales with the launch of its upcoming Galaxy S8 handset, although it said on Monday that it would be unveiled later than usual.
“Samsung knows competition remains tough at the top of the smartphone market,” said Ben Wood, chief of research at CCS Insight.
“Apple continues to derive huge profits from the iPhone family, while rivals such as LG are expected to launch new flagship devices at the MWC [Mobile World Congress] event at the end of February. The S8, which will be launched after MWC, needs to be extremely competitive to maintain Samsung’s lead and reinforce high-end, high margin sales after the Note 7 issues.”