It has been six years since Samsung first unveiled the groundbreaking Galaxy Fold, a device that introduced a unique form factor promising significant utility. At the time, many anticipated that these innovative devices would revolutionize the smartphone industry. However, those predictions have not materialized as expected. Instead of leading the market, Samsung has faced rising manufacturing costs and stagnant market penetration for its foldable smartphones.
Despite the challenges, Samsung's mobile head, TM Roh, remains unfazed by the current shipment figures. In a recent statement, he conveyed a willingness to incur financial losses on the latest foldable flagship models as long as his overarching goals are met. This approach indicates that Samsung prioritizes increasing shipment volumes over immediate profitability on each device sold.
In major markets, Samsung has chosen not to significantly raise prices for the latest Galaxy Z Fold 7 and Galaxy Z Flip 7. Analysts had predicted a potential 20 percent price increase, but the Korean giant has opted for only a modest single-digit hike. This decision, while puzzling, has been confirmed by sources such as The Korea Herald, affirming that it was a strategic move by the company. TM Roh elaborated on this approach, stating:
“Pricing is always a key consideration with new product launches. There were significant innovations in this year’s models, which increased production costs. To expand foldable phones and democratize AI experiences, we decided to absorb those costs internally.”
Taking into account the current geopolitical climate and rising global inflation, it is clear that Samsung faces higher costs in mass-producing its latest foldable devices. The incorporation of advanced technologies such as Qualcomm’s Snapdragon 8 Elite and Exynos 2500 further compounds these expenses. However, Samsung has managed to keep prices relatively stable, which is a commendable feat in today's economic environment.
An unnamed industry source indicated that the decision to avoid a substantial price hike stems from a notable sales decline of the Galaxy Z Flip 6, which experienced a 21 percent drop in shipments compared to its predecessor, the Galaxy Z Flip 5. This decline illustrates the competitive landscape Samsung operates in, particularly in markets where rivals like Huawei have a stronghold.
Huawei currently leads the foldable smartphone market in China, having recently introduced the world’s first commercial tri-fold device, the Mate XT. This remarkable achievement comes despite significant challenges posed by U.S. export controls. Samsung likely perceives Huawei as a serious competitor, prompting the company to adopt a competitive pricing strategy to gain traction in the Chinese market, the largest smartphone market globally.
In addition to its current offerings, Samsung is reportedly working on its own tri-fold smartphone, rumored to be named the Galaxy G Fold. This device is expected to debut in the fourth quarter, although production has been limited as of September. The launch could serve as a test to gauge market response and further solidify Samsung's position in the evolving foldable smartphone landscape.
