[Summary] "Apple Soars" Record-Breaking Performance... Samsung's Smartphone Throne Under Threat

Off-Season Q2 Sales Up 36%... iPhone Revenue Surges 50%
iPhone 12 Effect, 100 Million Units Sold by April... 5G Market Shipments and Revenue Overwhelming
Samsung to Hold 'Galaxy Unpacked' on Next Month 11... Counterattack with Foldable Phones in Second Half

[Asia Economy reporters Seulgina Jo and Suhwan Kim] Apple recorded its highest-ever performance in the off-season second quarter. The effect of the first 5G smartphone, the ‘iPhone 12,’ continued, with iPhone sales soaring nearly 50% compared to a year ago, and iPad, Mac, and wearables all maintaining double-digit growth. The upcoming ‘iPhone 13,’ scheduled for release in the second half of the year, is also expected to achieve record-breaking sales, threatening Samsung Electronics’ long-standing dominance in the global smartphone market. Samsung Electronics plans to create a breakthrough by launching a new foldable phone at next month’s ‘Galaxy Unpacked’ event.

◆ "Increasing New Customers" Apple Achieves Record-Breaking Performance

Apple announced on the 27th (local time) that it recorded $81.4 billion (approximately 94 trillion KRW) in sales for the second quarter of this year (its own fiscal 2021 Q3), a 36% increase compared to the same period last year. This was a surprise performance exceeding Wall Street estimates of $73.3 billion.

Although the second quarter is generally considered an off-season due to demand waiting for the next model, this year’s strong performance was driven by double-digit growth in sales of major products including the iPhone. iPhone sales revenue in the second quarter reached $39.57 billion, up 49.8% year-over-year. During the same period, the iPad ($7.37 billion) and Mac ($8.24 billion) segments grew by 12% and 16%, respectively.

Sales of other products, including wearables such as the Apple Watch, also reached $8.78 billion, a 36% increase from the previous year. The services division, including the App Store, Apple Music, and iCloud, grew 33% to $17.48 billion. Apple CEO Tim Cook emphasized, “There was a negative impact from semiconductor supply shortages centered on Mac and iPad,” but added, “Both upgrade demand and switchers (new customers switching from Android to Apple products) increased by double digits.”

Apple’s first 5G smartphone, the iPhone 12, has sold over 100 million units as of April this year. Currently, Apple holds an overwhelming number one position in both shipments and sales in the rapidly growing 5G smartphone market. According to global market research firm Counterpoint Research, Apple’s 5G smartphone market share in Q1 was 34% by shipment volume and 53% by sales revenue. Samsung Electronics trailed significantly with 13% and 14%, respectively.

◆ Samsung Loses 5G Leadership, Plans ‘Foldable’ Card for Second Half

Samsung Electronics is facing threats to its world smartphone throne it has held for over 10 years. It lost leadership in the 5G and premium markets to competitor Apple, which established the ‘Galaxy vs. iPhone’ rivalry, while also facing pursuit from Chinese companies like Xiaomi, which focus on mid- to low-priced models. The wearable market, including smartwatches and wireless earphones, is effectively dominated by Apple, with a significant gap already established between the two companies. The rapidly growing laptop and tablet PC markets, boosted by COVID-19, show a similar trend.

Ahead of its Q2 earnings announcement on the 29th, Samsung Electronics is expected to have maintained operating profit in the IT & Mobile (IM) division at the 3 trillion KRW level. Thanks to an expanded mid- to low-priced lineup, it performed well even in the off-season, but this pales in comparison to Apple’s record-breaking results.

Samsung Electronics plans to counterattack in the second half of the year with a new foldable phone. It is expected to officially debut at the Unpacked event on the 11th of next month and be released on the 27th of the same month. Notably, Samsung intends to significantly lower the price compared to the previous model, signaling competition with flagship smartphones including the iPhone. This also reveals Samsung’s intention to secure leadership in future form factor competition with Apple, which has yet to release a foldable phone.

Apple is also preparing to launch the iPhone 13, making the smartphone competition in the second half of the year expected to intensify. The industry anticipates that the iPhone 13 will also achieve record-breaking success. Apple is reported to have increased orders for the A15 processor, which will be installed in the iPhone 13, up to 100 million units. Samsung’s decision not to release a new flagship ‘Galaxy Note’ this year, focusing instead on foldable phones, is also expected to be a market variable.

Meanwhile, Apple is expanding its influence even in Samsung Electronics’ home market, South Korea. To expand its distribution network, Apple plans to partner with LG Electronics, which is withdrawing from the smartphone business on the 31st of this month, to sell iPhones. On this day, Hi Plaza, the operator of LG Best Shop, signed a win-win agreement with small and medium-sized businesses that had previously opposed it, so iPhone sales through LG Best Shop are expected to begin next month. LG Best Shop operates over 400 stores nationwide.