Samsung Aims to Outrun Smartphone Slump, Make Headway in China

Samsung Electronics Co. is counting on demand for premium devices to drive double-digit growth in sales of marquee Galaxy phones in 2023, despite signs the global market may contract a second straight year.

The world’s largest smartphone maker, which warned this week that a record smartphone slump may persist well into 2023, expects to outpace the industry by focusing on quality components while gradually expanding in countries like China where it’s lagged Apple Inc.

Global smartphone shipments fell by the most in about a decade in 2022, but the market for high-end gadgets dominated by Apple and Samsung has held up better during the downturn. On Wednesday, Samsung took the wraps off the latest iteration of its closest iPhone competitor, the S23, with better cameras and battery life.

“We expect that the challenges will continue this year, but we will achieve double-digit growth once again,” TM Roh, president of Samsung’s mobile business, said in an interview ahead of the unveiling. “Even in the midst of those challenges, we were able to expand market share in 2022 and will sustain that trend as it’s our main priority.”

Hoping to woo consumers, Samsung kept prices for the S23 stable despite rising material costs and major upgrades in the camera. But one big unknown is China.

While the country remains one of the world’s biggest buyers of memory chips, its smartphone market shrank last year when Covid Zero disruptions hammered the economy, and a recovery remains uncertain. At the same time, Samsung’s share of the Chinese market had dipped below 1% in recent years. But it made meaningful strides in premium smartphone market share last year, Roh added.

Samsung’s now drawing up a new strategy centered around its premium devices, preparing for an eventual bounceback. For instance, it’s releasing a specially designed foldable model for Chinese consumers called the W series.

“In China, we are building our basic fundamentals to offer what Chinese customers really want,” he said. “Our strategy is focused on premium smartphones and we’ve started to make a little headway. We are building up a foundation for a turnaround in the market, step-by-step.”

Smartphones rank among the most important businesses for the Korean chips and electronics giant, which counts on mobile devices to hook up a broader ecosystem of services, appliances and content.

Overall, Samsung was able to expand its slice of the global smartphone arena, Roh said. While its Chinese rivals’ sales slumped last year, Samsung’s market share rose to 21.6% in 2022 from 20% in 2021, according to IDC.

The Korean tech giant is now working on a mixed-reality device, dubbed the XR. While Apple’s set to launch its own headset later this year, Samsung is collaborating with Alphabet Inc.’s Google and Qualcomm Inc. on a yet-to-be-unveiled project.

“Moving into 2023, Apple and Samsung are better placed to navigate ongoing uncertainties thanks to their high-end dominance,” Le Xuan Chiew, a research analyst at Canalys, said in a report this week. Samsung is also focusing on profitability by strengthening its high-end lineup and adding premium niche products like the Fold series, he said.