Samsung Electronics has outperformed its production targets for smartphones and tablets in the first half of this year. The company has produced 13% more units than planned for in the first six months compared to its business plan for 2024.
The tech giant is providing its suppliers with a forecast of 16 weeks’ worth of production volume. With it being mid-June now, the production figures until June are almost finalized.
In the first quarter, Samsung Electronics produced 64.5 million units, exceeding the business plan by 22%. For the second quarter, an estimate of 49.9 million units, 3% higher than planned, is expected, excluding quantities produced by Chinese ODM companies like Wingtech and Hwachin.
The surge in first-quarter production was mainly attributed to the shipment increase of the Galaxy S24 series, which sparked interest in on-device AI technology, and strong sales of budget phones in the Indian market. Samsung’s strategy of securing inventory in advance also contributed to the increased production in the first quarter. The Galaxy S24 series outsold its predecessor, the S23, by 10% during the same period, with a significant emphasis on the Ultra model.
Looking ahead, third-quarter production is expected to decrease by more than 10% compared to the initial plan, following the significant production volume in the first quarter. Samsung Electronics may take a conservative approach in inventory management during the third quarter. The company plans to launch a new high-end foldable phone model in the third quarter, adjusting component orders based on the performance of foldable phone sales.
Samsung Electronics is expected to focus on defending its profit margins in the third quarter, avoiding excessive production increases following a strong performance in the first half of the year. The success of the foldable phones will be a crucial factor influencing future production strategies.
The new Samsung foldable phones are set to be unveiled in early July. The clamshell model, Galaxy Z Flip 6, is anticipated to have a thicker Ultra-Thin Glass (UTG) cover window compared to its predecessor, reducing the visibility of creases on the foldable panel and potentially positively impacting the expansion of the foldable phone market.
According to market research firm TrendForce, global smartphone shipments in the first quarter increased by 18.7% compared to the same period last year, reaching 296 million units. This increase was attributed to Chinese companies aggressively targeting smartphone shipments due to sluggish sales of Apple’s iPhone in China. Furthermore, there was also a base effect, given that the first quarter of the previous year, 2023, reflected the inventory adjustment efforts of device manufacturers. However, a 5-10% decrease in global smartphone shipments is expected in the second quarter of this year.
Samsung Electronics Continues to Excel in Production Volumes
Samsung Electronics continues to exceed production targets for smartphones and tablets in the first half of the year, showcasing its strong hold in the tech industry. With the company producing 13% more units than planned in the first six months of 2024, there are several key questions and challenges associated with this impressive performance:
Key Questions:
1. What factors have contributed to Samsung Electronics surpassing its production targets?
2. How does the forecast of 16 weeks’ worth of production volume impact the company’s supply chain and operations?
3. What strategies is Samsung Electronics employing to maintain its momentum in the second half of the year?
4. How will the launch of new high-end foldable phone models affect future production strategies?
Key Challenges:
1. Inventory Management: Maintaining a balance between production volume and inventory levels is crucial for optimizing profitability.
2. Competitive Landscape: With global smartphone shipments expected to decrease in the second quarter, Samsung Electronics must navigate a challenging market environment.
3. Technology Innovation: Keeping up with the latest advancements in smartphone features and design is essential for staying ahead of the competition.
Advantages and Disadvantages:
One advantage of Samsung Electronics exceeding production targets is the demonstration of its manufacturing efficiency and market demand for its products. This can enhance the company’s reputation and financial performance. However, a potential disadvantage lies in the need to carefully manage inventory levels to prevent overproduction and potential losses.
For more insights on smartphone industry trends and market forecasts, visit Counterpoint Research, a leading market research firm specializing in technology sectors. Stay updated on Samsung Electronics’ latest developments and product releases by visiting their official website at www.samsung.com.