According to the latest research from Strategy Analytics' Wireless Device Strategies (WDS) service, Samsung became the world’s most profitable handset vendor in Q2 2013. Apple slipped into second position, as margins have been hit by lackluster iPhone 5 volumes and tougher competition in China.

The term "handset" includes all smartphones and feature phones combined.

We estimate Samsung’s operating profit for its handset division stood at US$5.2 billion in the second quarter of 2013. Samsung overtook Apple for the first time, which recorded an estimated iPhone operating profit of US$4.6 billion. With strong volumes, high wholesale prices and tight cost controls, Samsung has finally succeeded in becoming the handset industry’s largest and most profitable vendor.

Apple’s reign as the world’s most profitable handset vendor lasted almost four years, from Q3 2009 to Q1 2013. Apple’s profit margin for its handset division has been fading recently due to lackluster iPhone 5 volumes and tougher competition from rivals. Samsung is performing well in the US market, while Huawei, ZTE and other local brands are growing vigorously in China. Apple is now under intense pressure to launch more iPhone models at cheaper price-points or with larger screens to fend off the surging competition and recapture lost profits in the second half of 2013.

Exhibit 1: Global Handset Operating Profits in Q2 2013  [1]

Global Handset Operating Profits (US$ Billions)

Q2 '13

Samsung

$5.2

Apple

$4.6

Source: Strategy Analytics

 

The full report can be downloaded by clients at this link.


[1] Numbers are rounded.