Over the past couple of years, Samsung Electronics' smartphone business has declined due to a variety of reasons, including the fact that the market has been populated by an increasing number of brands and competitive devices, most of which originate from China. However, with the release of the successful Samsung Galaxy S7 series in the first quarter of the year, the Korean tech company is finally regaining its spending power and analysts now predict that Samsung Electronics will soon ramp up investments in its display and semiconductor business in order to consolidate its position in the market.
According to analyst Chung Chang Won of Namura Holdings Inc. "Samsung's smartphone business has finally had a soft landing after a bumpy ride", and thus the company is now likely to increase its investments in the display and memory departments. While the Samsung Galaxy S7 lineup has been very well received and contributed to the company's recent success, Samsung also won a lot of ground in the mobile industry by perfecting its display and semiconductor businesses. As more smartphone manufacturers continued to make their way under the spotlight, Samsung Electronics managed to increase its revenue by supplying emerging and well-founded smartphone makers with displays and memory chips; two of the more costly smartphone components. Furthermore, as Samsung Display continued to push the limits of OLED technology by creating and promoting flexible panels, more smartphone makers are expected to switch from LCD to OLED by the end of the year, including Apple who is rumored to adopt OLED display technology for its upcoming iPhone flagship.
Samsung is expected to reveal preliminary Q2 earnings this Thursday, and market analysts predict that the company's operating income will increase by roughly 7% to 7.4 trillion won (~$6.4 billion). Nevertheless, as the global smartphone market continues to lose its momentum, some analysts believe that Samsung needs to, and will continue to invest in growing its other businesses. Samsung Display already halted the production of LCDs in some of its lines in order to facilitate OLED manufacturing, and industry watchers believe this trend will continue. Next year the company is also rumored to launch a truly foldable smartphone featuring an in-house display, which could change the game and establish new standards in the industry. And with more smartphone makers (including Apple) having to rely on Samsung to acquire certain components – possibly even foldable / flexible OLED displays – the Korean tech giant could enjoy tremendous growth in the following quarters. According to HI Investment analyst Chung Won Suk "Samsung needs to move faster and go bold with investment now" in order "to keep rivals off its turf".