Samsung expects smartphone demand to grow as supply chains are now '100% stable'

Recovery is being driven by demand in the premium segment, executive says

Doohee Lee, president of Samsung Gulf Electronics, at the UAE launch event of the Galaxy S23 series in Dubai on Wednesday. Photo: Samsung

Samsung Electronics, the world's biggest mobile phone manufacturer, sees global supply chains as being "100 per cent stable" following a period of disruptions when company operations were hampered, according to a regional executive.

The company is also recording increased demand, especially in the premium smartphone segment, which has remained "really resilient" to the challenges the industry faced, Fadi Abu Shamat, head of the mobile experience division at Samsung Gulf Electronics, told The National.

"Last year was challenging, to say the least, and we were affected by the supply chain disruptions that happened globally," he said ahead of the UAE launch of the new Galaxy S23 series in Dubai.

"Moving to 2023, it's a totally different vision that we're having. It would be back to the 'golden days': the world supply chain is 100 per cent stable, and we’re now expecting better, more stable demand from consumers, and better and more stable supply from our factories globally."

Global smartphone shipments declined 12 per cent annually to 1.2 billion units in 2022, the lowest since 2013, a report from Counterpoint Research this month found.

In the fourth quarter alone, shipments dropped by 18 per cent year-on-year to their lowest level for a holiday quarter since 2013, it said.

In its 2022 financial report last month, Seoul-based Samsung also acknowledged that the sector was hit in the fourth quarter "with the mass market contracting sharply due to continued inflation and geopolitical instability".

However, the demand for premium products has been growing, Mr Abu Shamat said.

Premium smartphones are those typically priced $400 and above, and their average selling prices rose eight per cent annually to a record $780 in the second quarter of 2022, according to Counterpoint Research.

"The consumers in the premium segment are not actually price hunters — they are quality hunters, who look for the highest return on investment for their purchase of a smartphone [in that category]," Mr Abu Shamat said.

"Samsung's strategy from day one has never been to compete on price point offering ... the long game requires listening to consumers and providing what they need and demand," he added.

UAE prices for the Galaxy S23 series start at Dh3,199 ($871) for the base model, with the top-end Ultra device costing Dh6,449.

While Mr Abu Shamat acknowledged that average selling prices have indeed been increasing, he pointed out that this rise has also matched the offerings smartphones have at present.

As a result, prices become "more acceptable and reasonable", he said.

"We avoid this kind of market competition that has price as a first offering ... our main focus is on the premium segment."

Pre-orders for the Galaxy S23 series in the UAE end on Thursday, and the smartphones will be available in stores on Friday.

"The Middle East, specifically the UAE, is an extremely high potential market with extremely premium customer preferences," Mr Abu Shamat said.

Pre-orders in the UAE have exceeded Samsung's target of 50 per cent growth compared to last year's S22 series, and now the company is seeking the same increase in sales for their new devices, he said at the launch on Wednesday.

Samsung's operating profit in the three months ended December fell 69 per cent annually to 4.31 trillion won ($3.35 billion), from 13.87 trillion in 2021, while revenue declined 8 per cent to 70.46 trillion won from 76.57 trillion won a year earlier.

For the full year, operating profit dropped 16 per cent annually to 43.38 trillion won, from 51.63 trillion in 2021. Revenue rose more than 8 per cent year-on-year to 302.23 trillion won from 279.6 trillion won in 2021.

In its semiconductor unit, Samsung posted operating profit of 270 billion won in the fourth quarter, down 97 per cent annually from 8.84 trillion won a year earlier. Revenue during the period declined more than 23 per cent to 20.07 trillion won from 26.01 trillion won.

Samsung — among the world's top chip makers — had previously told The National that it “continues to take all the actions globally to mitigate the impact" of supply disruptions.

The market's current direction, however, is a "positive indicator for us that we're on the right track. In general, that's how we expect this year to continue", Mr Abu Shamat said.