Samsung Electronics overtook Apple as the world's top smartphone maker in the July-September period with a 44% jump in shipments, and forecast strong sales in the current quarter in a clear warning to its rivals.
Samsung only entered the smartphone market in earnest last year, but its sales have skyrocketed thanks to a sleek production system that rapidly brings new products to market. Apple introduced its first iPhone in 2007.
“In the handset division, Samsung has no real rival models to challenge its products except for the iPhone 4S. Apple and Samsung will continue to dominate the market in the fourth quarter,” said Kim Hyun-joong, a fund manager at Midas Asset Management, which owns Samsung shares.
Profits from the South Korean firm's telecoms division, announced on Friday, more than doubled from a year ago to a record 2.5 trillion won ($2.2 billion) and accounted for 60% of Samsung's total profit, offsetting a plunge in earnings from its bread-and-butter memory chips.
Shipments of smartphones jumped 44% from the preceding quarter to 27.8 million units, up nearly four times from a year ago, according to research firm Strategy Analytics.
Apple's iPhone sales shrank by 16% to 17.1 mln units in the third quarter. Samsung had 23.8% of the global smartphone market in the third quarter, 9 points higher than Apple. Samsung's flagship Galaxy line of products is powered by Google's Android software.
Apple sold fewer phones in the third quarter, missing street expectations for the first time in years, as customers held off buying iPhones until the October launch of the latest version.
The world's biggest technology firm by revenue reported a 4.25 trln won operating profit for the July-September quarter, broadly in line with its earlier estimate of 4.2 trln won. That was down from 4.9 trln won a year ago but up from 3.8 trln won in the preceding quarter.
Samsung said its fourth-quarter earnings could be better than the third, boosted by one-off gains from its $1.4 bln sale of its hard disk drive business to Seagate Technology.
“Looking ahead into the fourth quarter, when industry demand is traditionally at its peak, Samsung expects sales of mobile devices to remain strong and flat-panel TV shipments to increase,” the company added in an earnings statement.
Apple, whose iPhone sales account for nearly half the firm's total sales, reported a 40% gross margin, or the percentage of sales left after subtracting the cost of goods sold. Samsung's phone division reported a 16.9% operating margin, which further takes account of marketing costs.
Nevertheless, Samsung faces challenges as the new iPhone introduced earlier this month is notching up strong sales.
Nokia is also fighting back with its first phones based on Microsoft's Windows software. And Sony announced on Thursday it would take full ownership of its mobile venture, Sony Ericsson, in a bid to exploit its music and video library.
Samsung on Thursday announced the launch of its Galaxy Note mobile device, powered by Android, to square off against a series of new models released by Apple, Nokia and HTC.
Q4 SEEN BETTER THAN Q3
Profits from Samsung's chip business more than halved to 1.59 trln won, but the division held up well as its relatively high exposure to lucrative mobile chips helped the firm offset a sharp plunge in prices of commodity computer memory chips.
Samsung was the sole profitable firm among major global dynamic random access memory (DRAM) chip makers in the third quarter.
Second-ranked computer memory chip maker Hynix Semiconductor and Japan's Elpida Memory swung to deep losses as prices of DRAM chips used in PCs tumbled about 50% in the third quarter.
Samsung's chip business is also benefiting from strong demand for mobile processor chips used in Apple's iPhone and iPad tablet as well as its own Galaxy smartphones.
