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Published on : Oct 29, 2014

In the quarter ending September 2014, Samsung Electronics Co. Ltd registered the smallest earnings ever in two years. The drop in earnings can be easily attributed to heavy competition from new Chinese devices and the Apple phones. The net income stood at US$4 billion for the South Korea-based company.

Apple has been Samsung’s strongest contender ever since the latter entered the phone market with full swing. Today, the company is facing tough competition from the Apple as it tries to win over loyal customers in the large-screen segment with its latest launch. The next big Samsung needs to watch out for is the budget phone makers such as Lenovo Group Ltd and Xiaomi Corp. The domino effect of this drop in earnings can also be felt by Samsung’s other business units such as display and chip divisions. 

Although Samsung has introduced two new Note gadgets with considerably large displays, they barely had an impact on the launch of iPhone 6 and iPhone plus which debuted on the 19th September 2014. The profit margins for Samsung have also suffered due to the reduction in the average selling price of the devices and increased spending on the marketing strategies to improve growth.

In case of Samsung’s memory chips the saving grace was global demand for servers and personal computers. According to Kim Sung, an analyst at Kiwoom Securities Co., the demand for personal computers was quite good and is expected to grow in the Q4 of 2014.