Samsung Electronics hit the jackpot in the second-quarter performance of its mobile experience (MX) division, driven by the success of its artificial intelligence (AI) smartphones. The effect is interpreted as a reflection of Samsung expanding AI features from its flagship model, the "Galaxy S series," to the mid-range model, the "Galaxy A series," strengthening its "AI popularization" strategy. Notably, it has also significantly narrowed the market share gap with Apple in the U.S., the home of the iPhone.
◇ Samsung MX division achieves performance jackpot thanks to AI smartphone success
According to the industry on the 4th, the combined operating profit of Samsung Electronics' MX and Network (NW) divisions in the second quarter of this year reached 3.1 trillion won, a 39% increase from 2.23 trillion won during the same period last year. Considering that the total operating profit of Samsung Electronics in the second quarter was 4.7 trillion won, it means that the mobile business has driven overall performance. During this period, sales in the MX and NW divisions totaled 28.5 trillion won, up 6.6% from the previous year.
The industry believes that this strong performance is due to the effectiveness of Samsung's AI smartphone popularization strategy. The success of AI smartphones has led to explosive increases in demand for both flagship models (Galaxy S25) and mid-range products (Galaxy A series). Notably, the incorporation of AI into the relatively inexpensive Galaxy A has played a significant role. Samsung launched the world's first on-device AI smartphone, the "Galaxy S24," last year. An IT industry official noted, "Last year, the AI features were first added to the flagship models and only appeared in some of the Galaxy A series, but starting this year, it has spread to more Galaxy A series models," adding, "The effect is now visible in the performance results." The Galaxy A series with AI is launched at various price points from around 400,000 won to 700,000 won.
◇ Cost-effectiveness strategy also contributes to AI smartphone expansion
Samsung's pricing strategy has also contributed to the expansion of AI smartphone sales. Although Samsung equipped all versions of the flagship model "Galaxy S25" launched in January with an increased price Qualcomm AP chip, it froze prices to expand the use of AI smartphones. The industry estimates that it has likely slightly reduced prices for mid-to-low-end models as well, given that the average selling price (ASP) of Samsung smartphones in the second quarter fell by $9 compared to the previous year. An official from the electronics industry stated, "Despite the drop in ASP, the 39% increase in operating profit seems to be due to Samsung reducing pricing pressure, resulting in explosive demand for AI smartphones."
According to the market research firm Counterpoint Research, Samsung ranked first in the global smartphone market share (based on shipping volume) in the second quarter. The global smartphone shipments of Samsung Electronics increased by 8 percentage points (P) compared to the previous year in the second quarter.
◇ The "AI popularization" strategy succeeded in the U.S. and Europe… strong performance expected in the second half
Samsung Electronics is expected to continue its strong smartphone sales in the second half of the year. This is because Samsung recently announced its intention to strengthen its AI popularization strategy. Last month, Roh Tae-Moon, acting head of Samsung Electronics' DX division, stated, "To popularize AI, we will equip more than 400 million devices with Galaxy AI this year." This is double the previous year's target (200 million devices). There are suggestions that Samsung is likely to also spread AI capabilities into its low-end products.
The region where Samsung's AI popularization strategy has been most effective is identified as the United States. According to market research firm Canalys, Samsung's smartphone market share in the U.S. rose to 31%, an increase of 8 percentage points (P) compared to last year in the second quarter. During the same period, shipments reached 8.3 million units, a 38% increase. The market share gap with Apple in the U.S., the home of the iPhone, has narrowed to 11%P from 33%P last year. Although Apple decided to include the more personalized AI service feature "Apple Intelligence Siri" in the iPhone 16, the delay in its release has reportedly impacted the spread of demand for Samsung's AI smartphones. The U.S. is a key market, accounting for about 15% of Samsung's smartphone revenue.
The AI popularization strategy has also proved successful in Europe. According to market research firm Counterpoint Research, the sales volume of the Galaxy A56, which was launched in Western Europe on March 19 of this year, increased by 12% compared to its predecessor (Galaxy A55) in just 50 days. Kim Yong-Seok, a distinguished professor at Gachon University (former executive at Samsung Electronics), stated, "Providing personalized experiences to users through AI services is very important," and added, "Although Samsung took the lead last year by launching the world's first AI smartphone and achieved visible results this year, a differentiation strategy is needed to stay ahead in competition with latecomers like Apple and Chinese companies."