Fitch Ratings
June 22, 2012

Samsung to maintain leading smartphone market share

Fitch Ratings expects Samsung Electronics to maintain its leading position in smartphone unit sales over the next two years.

This view reflects an ability to continue to develop attractive new products in a variety of sizes and price points; technology leadership in key smartphone components; and broad acceptance of the Android operating system.

Fitch recently affirmed Samsung’s rating at ‘A+’/Stable, the highest among the agency’s Asia-Pacific portfolio of rated technology companies. Fitch forecasts record revenue and EBIT again in 2012, driven by growth in the higher-margin smartphone business. The telecom segment’s EBIT margin was 18.4% in Q112, significantly higher than 10.7% in Q111, boosting the overall EBIT margin to 12.9% from 8.0%.

Samsung’s market share of smartphone unit sales has risen to a leading 31% from just 3% two years ago. In 2011, the company sold 96.7 million smartphones (Apple: 91.3 million), and 45.0 million in Q112 (Apple: 35.1 million). Apple’s unit market share increased to 24% from 16%, but Nokia (‘BB+’/Negative) plunged to 8% from 38%.

Fitch expects Samsung to maintain its number one position in terms of annual unit sales for at least the next two years, although Apple’s sales volume on a quarterly basis could overtake Samsung during the particular quarters when it releases its updated iPhone models.

Samsung has a wider range of handset models, enabling a more effective penetration of both developed and emerging markets. Samsung also continues to forge ahead as the undisputed leader for key smartphone components – including display, processor and memory chip technologies – reinforcing the likelihood that its future smartphone models will be equipped with cutting-edge technology.

Ongoing expansion of the Android OS market share, which stood at 56% in Q112 versus 23% for Apple’s iOS, suggests that the perceived gap in terms of user-preference between Apple’s iOS and Android’s OS has narrowed significantly.
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