Samsung Optimistic on AI-Driven Smartphones After Sales Loss to Apple
Samsung, the South Korean tech giant, faced a challenging year in 2023 as it grappled with declining profits and market share in the smartphone industry. On Wednesday, the company revealed that its shares dipped by 1.6% in Seoul, marking a continuation of four consecutive quarters of falling profits.
In the December quarter of 2021, Samsung's operating profits stood at 4.3 trillion won ($3.5 billion). However, the company experienced a 35% decrease in profit in the same quarter of 2022, amounting to 2.8 trillion won ($2.1 billion). The decline continued into 2023, with Samsung reporting a significant loss of 14.9 trillion won ($11.2 billion) for its device solutions unit compared to a profit of 23.8 trillion won ($17.8 billion) the previous year.
Several factors contributed to Samsung's struggles. The overall global smartphone market experienced a decline, reflecting modest consumer sentiment amid macroeconomic uncertainties. The strong replacement cycle seen during the pandemic era also faded, reducing consumer urgency to upgrade devices. Vendors, including Samsung, were forced to cut production targets to avoid excess inventory, affecting sales momentum. Competitive pressure from companies like Apple, Xiaomi, TRANSSION, and OPPO tightened the market share landscape, making gains challenging.
Geopolitical and regulatory complexities also played a role. Uncertainties around trade policies influenced operational tactics, with a notable exception being the US market where Samsung maintained high inventory to frontload shipments amid tariff unpredictability. Samsung's smartphone shipments decreased in the last quarters of 2023, illustrating weakening consumer demand and intense competition.
Despite these challenges, there are indications of Samsung's potential revival in 2024. The company is anticipating stimulating demand with the introduction of innovative products such as AI-powered smartphones. Samsung remains optimistic about a potential revival in mobile device demand in the coming year and is cautiously optimistic about a gradual market recovery.
Samsung expects moderate improvement in earnings for the first half of 2024, with a more significant upturn projected for the second half of the year. The company is aligning production and tactical wins closely with operational efficiency, vital for navigating the volatile market environment and improving profitability.
Industry research suggests that foldable smartphone panels set new shipment records in Q2 2024, helped in part by earlier Samsung foldable launches. This positions Samsung well in a high-growth, premium device segment. Samsung is also capitalising on the success of its Galaxy A series, with new models like the A36 and A56 introducing AI features to more affordable segments, generating shipment growth of about 7.9% in Q2 2025, signalling renewed consumer interest.
Despite losing its status as the world's leading smartphone manufacturer in the fourth quarter of the previous year, Samsung successfully defended its leading position with around 19% market share in Q2 2025, showing resilience. Overall, Samsung's outlook for revival in 2024 centres on leveraging innovative mid-range devices with AI features, capitalising on foldable smartphone growth, and navigating macroeconomic and geopolitical challenges with improved operational efficiency to regain momentum in profits and market share.
In the face of a globally challenging smartphone market, Samsung aims to stimulate demand with the introduction of AI-powered smartphones in 2024, positioning itself for a potential revival. As the company focuses on aligning production with operational efficiency, Samsung remains optimistic about a gradual market recovery, particularly in the premium device segment with foldable smartphones and the affordable segments with AI-featured Galaxy A series.
