Samsung's profit sinks 39% hit by bigger iPhones
SEOUL, South Korea (AP) — Samsung Electronics Co. said its first-quarter net income plunged 39 percent as consumers switched to bigger iPhones, squeezing its profit from the mobile business to less than half from a year earlier.
Context & Ripple Effects
The April 2015 report captures the moment Apple's move to larger iPhones took direct aim at Samsung's core franchise: big screens were the differentiator Samsung had built its premium Galaxy line on, and once Apple matched them, the mobile division's profit fell to less than half its year-earlier level. The quarterly slide was already established by then and continued through the year — by summer, Samsung posted a fifth straight quarterly decline as the Galaxy S6 fell short of market expectations.
The pattern proved durable rather than episodic. Later coverage shows Samsung repeatedly back at multi-year lows — after the Note7 recall in 2016, again in 2019 when semiconductors and mobile both slumped, and in early 2023 with operating profit at its weakest since late 2014 — while the chip business alternates between cushioning the phone business and deepening the fall.
First-order effects
- Samsung Electronics' mobile division sees profit cut to under half its prior-year level, immediately weakening the segment that had driven the company's record earnings.
- Consumers defecting to larger iPhones hit Samsung where it held pricing power, forcing the premium Galaxy line to compete head-on with Apple at comparable screen sizes for the first time.
Second-order effects
- With handsets no longer reliably carrying margins, Samsung leans harder on its semiconductor operations — a dependence visible years later when a chip-and-mobile slump produced a 60% first-quarter profit drop in 2019 and the company's worst quarter since 2014 in early 2023.
- Apple's large-screen entry resets the premium Android market: Samsung must defend share against a rival whose ecosystem pull now extends into the phablet segment Samsung pioneered.
Third-order effects
- If the decade-long pattern in this coverage holds, Samsung's earnings become hostage to two cycles it controls imperfectly — Apple's product cadence on one side and memory-chip supply-demand on the other — making diversified bets like foldables and displays structurally necessary rather than optional.
- Repeated troughs tied to smartphone competition and chip demand push Samsung toward a portfolio structure closer to a components supplier with a consumer brand attached than a pure device maker.
The trend: Samsung's profitability has spent a decade oscillating between iPhone competition in smartphones and the memory-chip cycle, with each downturn shifting the company's center of gravity further toward semiconductors.