The Samsung juggernaut widens its lead over Apple

If there were any doubts about Samsung maintaining its world’s-top-phone-manufacturer status for the short to medium-term future, they should be dispelled as of now. The Korean company’s results for the fourth quarter of 2012 show profits up a whopping 76 percent since Q4 2011, reaching 7.04 trillion won ($6.55 billion).
Much of that is down to Samsung’s two Android flagships, the Galaxy S III and Note II. Samsung’s Mobile Communications division brought in revenues of 27.23 trillion won ($25.35 billion) during the quarter, which represents just under half of the overall company’s revenues in that period – remember that Samsung also makes everything from semiconductors to refrigerators.

Smartphone supremacy

“Samsung led gains with its full lineup of entry- to mid-level smartphones, expanded sales of tablet PCs and an increase in average selling price (ASP) from the previous quarter,” the firm said in its results statement. “The success was mainly brought on by strong sales of Galaxy S III and Galaxy Note II, which beat the popularity of their predecessors with record sales in record time.”
Samsung doesn’t break out actual mobile phone shipment volumes in its financial reports, but analyst house IDC estimates shipments of 63.7 million smartphones during the quarter. That’s up against Apple(s aapl)’s 47.8 million iPhone shipments during the same period. During the fourth quarter of 2011, Apple sold 37 million smartphones and Samsung sold 36.2 million. At the time the two companies were battling it out for the top spot, as Samsung had been ahead in the previous quarter, while people were waiting for the iPhone 4S.
Those days are over: the fourth quarter is what really counts, due to iPhone launch timing and the holiday season, and Samsung is now clearly way ahead of its U.S. rival in terms of shipments, with 29 percent market share to Apple’s 21.8 percent. There’s a big drop to the third-place company’s share – Huawei can boast 4.9 percent of the smartphone market right now, at least in terms of shipments. (Sony(s sne)’s next, followed by ZTE, and Nokia(s nok) is now jumbled into the “others” category.)
Obviously Apple is more profitable, having made $13.3 billion in profits during the quarter, which is roughly twice as much as Samsung did across its whole business. That said, Samsung’s average smartphone selling price is rising, as its big hitters are premium devices.

PC decline

Other elements of Samsung’s results also provide useful indicators for various tech sectors. One relates to the company’s DRAM business. It should come as no surprise that Samsung sees “weak” demand for its PC DRAM – the desktop PC business as a whole is in inexorable decline as the world goes mobile, and we saw further evidence just days ago when Intel(s intc) pulled out of the motherboard business. Samsung’s mobile DRAM business is steady, and the company expects that and its server DRAM line will do well this year.
In a similar vein, Samsung’s notebook and monitor display panel business is also feeling the pain, while OLED panels for smartphones are keeping profits up.
And where’s the biggest growth in mobile? Emerging markets, of course – in fact, Samsung expects demand for smartphones in developed countries to “decelerate” during the first quarter of 2013, while more affordable smartphones and “a bigger appetite for tablet PCs” stimulate demand in emerging markets through the whole year.
With a company that has as diverse a portfolio as Samsung’s, results such as these really do provide a wide-angle snapshot of the times we live in. And, tech landscape aside, that also includes uncertainty: Samsung said it’s probably keeping capital expenditure steady for 2013 rather than increasing investment, but it will “respond to the market’s ebb and flow with a capex plan that is flexible in manner”.