Samsung Electronics recently announced a policy to expand the target for its used smartphones (hereafter referred to as used phones). This has led to discussions within the industry that a market entry into the domestic renewed-phone market, anticipated for 2023, is imminent. The budget phone industry expects that Samsung's entry into the renewed-phone market will be an opportunity to reverse the crisis facing the sector. This is because significant consumer demand is projected for purchasing Samsung renewed phones at over 30% less than the retail price and switching to affordable budget phone plans.
Samsung Electronics began its new used phone compensation policy, called the 'Galaxy Simple Compensation' program, on the 14th. This program allows customers to sell Galaxy used phones on Samsung.com at any time of the year, even if they do not purchase new Samsung smartphones. Samsung Electronics, which previously only bought used phones from customers who purchased new models, has expanded the scope to all of its customers. Samsung Electronics noted, "Through Galaxy Simple Compensation, we will purchase used phones that customers no longer use and contribute to the circular economy by utilizing them for resale and other purposes."
Amid these developments, there are discussions in and out of the industry suggesting that Samsung is actively buying back its used phones in preparation for entering the renewed-phone market in Korea. Renewed phones are products that have been returned, including normal products, initial defective products, display models, and used products, which Samsung engineers refurbish using 100% genuine parts and sell at lower prices than retail.
Currently, Samsung Electronics' renewed phones are sold only in three countries: the United States, the United Kingdom, and France. The product prices vary greatly depending on the model, but on average, they are over 30% cheaper. Older models can be purchased at prices nearly 50% less. For example, in the U.S., the Galaxy S22 Ultra renewed phone is sold at a discount of 48.3% compared to the retail price of $1,199 (about 1.75 million won), at $619 (about 900,000 won). The retail price of the latest product, the Galaxy S23 Ultra 256GB, is $1,199, but the renewed phone is sold at a price 24% lower, at $919 (about 1.34 million won).
Samsung Electronics revealed during the 2023 National Assembly audit in October that "it plans to launch the same renewed phones in Korea as in overseas markets," but did not specify a concrete timeline.
The budget phone industry, which is in crisis due to deteriorating market conditions, is waiting for Samsung's entry into the renewed-phone market. This is because there is an increasing demand for consumers, exhausted by phone inflation, to combine cost-effective renewed phones with cheap budget phone plans.
Hwang Seong-wook, vice chairman of the Korea Budget Telecommunications Association, stated, "If Samsung releases renewed phones, it will help revitalize the budget phone market," adding, "There is a high possibility that customers looking for renewed phones for economic reasons will switch to budget phone options."
In contrast, domestic telecommunications companies are not in favor of Samsung's entry into the renewed-phone market. A source from the telecommunications industry mentioned, "Subsidies for devices are shared between telecommunication companies and manufacturers; however, manufacturers are unlikely to allocate subsidies again to older refurbished phones that have already received subsidies once. Ultimately, the communication company would need to cover 100% of the subsidies, but from their perspective, they cannot provide substantial subsidies to attract subscribers to mid-to-low-end pricing plans."