With the upcoming launch of the new smartphone "Galaxy S25" this month, analysis suggests that the average selling price (ASP) and shipments of smartphones in the first quarter will decline. Due to the recent spike in the won-dollar exchange rate, the expense of raw material purchases is increasing, and the production volume of the Galaxy S25 is expected to fall short of its target. The expansion of Chinese manufacturers in the mid-range smartphone market is also a burden. ASP is an indicator that shows the average price of sold products, and a higher number indicates that more high-priced products were sold.
On the 16th, domestic securities firms, including Eugene Securities, reported that the ASP of Samsung Electronics' mobile experience (MX) division's smartphones for the first quarter is estimated to be $313, a 6.8% decrease compared to the previous year. During the same period, smartphone shipments are projected to drop by 3.4% to 57.9 million units compared to the same time last year (59.9 million units). Consequently, the operating profit of Samsung Electronics' MX division for the first quarter is expected to be 3.3 trillion won, a 5.7% decrease from the previous year.
Usually, Samsung Electronics increases ASP in the first quarter of every year when new products are released, thereby expanding profitability. Last year's first quarter ASP ($336) increased by 3.4% compared to the first quarter of 2023 ($325).
However, with the skyrocketing won-dollar exchange rate, the growth of Samsung smartphones' ASP and shipments is also expected to be hindered. The industry estimates that Samsung Electronics' smartphone production volume this year will be 22.94 million units, a reduction of 10 million units compared to the original target. As the expense for raw material purchases increases, it is inevitable that shipments of flagship smartphones, which incorporate many high-cost components, will be reduced, leading to a decline in ASP.
The aggressive approach from Chinese corporations is also having a negative impact on Samsung Electronics' smartphone business. According to market research firm Counterpoint Research, Samsung Electronics had a 19% share of the global smartphone market last year, ranking first. However, its share decreased by 1 percentage point (P) from the previous year. In contrast, Xiaomi, which ranked third, achieved a 14% share, an increase of 1% P from the previous year. Recently, Xiaomi has been expanding its portfolio with various products, increasing its market influence.
Park Kang-ho, a researcher at Daishin Securities, noted that "Given the exchange rate pressures, it is not easy for Samsung Electronics to increase the production of the Galaxy S25 and raise ASP," adding that "even considering the influence of Chinese manufacturers in the smartphone market, it will be difficult to easily raise selling prices."