With mobile phone sales slowing down across the board, it’s no wonder that Samsung is feeling some pressure. The Korean technology giant has been relying heavily on its smartphones to keep afloat in this market, but now there are signs of weakness finally showing up within their own ranks too.
With a potential recession hanging in the air, demand for smartphones has gone down.
The International Data Corporation (IDC) recently projected a decline in smartphone shipments by 3.5% for the year, which they say will result from higher prices and decreased demand.
According to a recent report, Samsung has millions of unsold phones in stock, showing that it is affected by the current situation.
With 50 million Samsung phones in their inventory, it’s not surprising that distributors are having a hard time selling the mid-range Galaxy A Series, as reported by media outlet Elec.
Sources say that Samsung plans to ship 270 million phones this year, highlighting an 18% error rate for their unsold inventory of 60 million unsold phones.
The high amount of unsold inventory at Samsung suggests that they were overestimating sales in the first half this year as company’s typically have a total shipment of about 10% of unsold inventory.
The number of smartphones produced by Samsung each month in January and February dropped from 20 million phones to 10 million in May. This may be a response to inventory growth amidst reported lower demand overall.
South Korea’s Maeil Economic Daily reported in May that Samsung was cutting orders for smartphones this year, lowering the volume from 310 million units to 280 million units, almost 10% less than planned.
The recent developments in the smartphone industry have caused many companies to lower their expectations. Samsung is not alone as other developers also cut back on production and stockpile purchases, waiting for a clearer picture of how things will play out with the inflation, supply chain disruptions, and the Russia-Ukraine war.
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