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Saturday, June 25, 2022

Samsung has 50 million unsold smartphones in stock

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Smartphone manufacturers big and small have been battling severe supply chain issues for the last couple of years, but a new report claims that Samsung is now facing the complete opposite — too much supply.

Samsung severely misjudged demand for 2022

The Elec is reporting that Samsung currently has almost 50 million smartphone units in distributor stock waiting to be sold. That’s equivalent to almost 20% of the brand’s annual smartphone shipments target, so it’s certainly not a small number.Samsung’s budget and mid-range Galaxy A models are understood to make up the bulk of the unsold stock. The rest presumably is made up of high-end Galaxy S and Galaxy Z line devices like the Galaxy S22 and Galaxy Z Flip 3.

Having millions of units of unsold smartphone stock is relatively normal for Samsung, but the current numbers are almost double what the South Korean giant typically targets in a calendar year. To be exact, Samsung usually aims to maintain around 10% of its annual smartphone production volume in unsold distributor stock. This year that would mean having about 27 million units available, rather than 50 million.

But the company severely misjudged future demand in late 2021. Samsung was originally targeting over 300 million units in 2022, an extremely aggressive goal set before Russia’s invasion of Ukraine and inflation soared across the globe.It powered ahead with this objective, manufacturing around 20 million units per month in both January and February. But come March, Samsung started reigning itself in, and the number dropped to 10 million units by May. On top of this, the world’s number one smartphone manufacturer cut component orders from suppliers by 30% to 70% between April and May, another sign that it doesn’t expect things to improve anytime soon.

The brand could still have a strong end to the year

Even though things aren’t quite going to plan for Samsung, the second half of 2022 could still be strong for the company thanks to its revised production targets and the arrival of new Galaxy Z models.

The brand is likely to continue limiting its production until inventory levels have returned to a safe level. Some of the company’s Galaxy A models are among the world’s best-selling smartphones, so it shouldn’t have any trouble shifting units even if demand is a little lower than expected.

On the other end of the spectrum, Samsung is understood to be preparing for significant higher foldable smartphone demand in the coming months once the next-gen Galaxy Z Fold 4 and Galaxy Z Flip 4 make their debut.

Leaked renders of the two smartphones have revealed mostly unchanged designs. But that’s not necessarily a bad thing, since it’s largely expected to translate into price cuts across the board. How big those price cuts will be is unclear, but a $100 drop at minimum for the Galaxy Z Flip 4 seems incredibly likely. The larger Galaxy Z Fold 4, on the other hand, could start at $1600 — $200 cheaper than the Fold 3.

And it’s those pricing changes that are set to boost demand, with Samsung reportedly making plans to ship 15 million foldable smartphones by the end of 2022, double the 2021 total. Don’t worry about Samsung’s profits though. Those will be partially protected with the launch of higher storage variants. Namely a 512GB version of the Flip 4 (in addition to the usual 128GB and 256GB models) and a 1TB variant of the Fold 4 (in addition to the current 256GB and 512GB versions).





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