Samsung seems to be finding it difficult to move its Galaxy smartphones off the store shelves. The Korean firm reportedly has a stockpile of 50 million smartphones stuck with distributors globally. That’s more than 18 percent of the company’s estimated shipment volume of 270 million units in 2022. Usually, only around 10 percent of total yearly shipments are left in distributor stock at any point in time. Having almost twice as many units in unsold inventory is a worrying sign for Samsung and the smartphone industry as a whole.
The smartphone market is staring at another slowdown this year as the demand has declined globally amid growing recession fears. Various factors such as the coronavirus lockdowns in China, the Russia-Ukraine war, and the inflation crisis have contributed to this slowdown.
Research firms have already lowered their shipment estimates for 2022 to levels below 2021. Smartphone makers have also reduced production and adjusted their sales targets. Samsung, which is the world’s largest smartphone vendor, saw this coming early too and reduced its sales target by ten percent, from 300 million to 270 million.
However, the company may struggle to achieve the revised target as well. It has reportedly cut down its production rate by almost 50 percent as it waits to clear the inventory. For the first two months of the year, Samsung produced 20 million smartphones monthly. But by May, the monthly production volume had dipped to just ten million units. Its suppliers are seeing up to 70 percent lowered demand for parts and components.
According to the Korean media, Galaxy A series devices make up a “huge” portion of Samsung’s current unsold inventory of smartphones. These mid-range devices contribute the bulk of the company’s sales every year. Unless it can dramatically turn things around in the coming months, we don’t see Samsung shipping 270 million smartphones this year.
Samsung is aiming to sell 15 million foldable smartphones this year
Despite the looming troubles, Samsung is aiming to significantly increase the sales of its foldable smartphones this year. The company sees itself selling 15 million units of the Galaxy Z Fold 4 and Galaxy Z Flip 4 combined in 2022. That’s more than double the total sales volume of the two 2021 models combined last year.
The Korean firm has been pushing to make foldables mainstream ever since it launched the first model back in 2019. It has significantly improved its offerings over the years while reducing the price. We are expecting another round of big improvements and lower prices this year. The Galaxy Z Fold 4 and Galaxy Z Flip 4 are expected to go official early in August.