Samsung is viewed negatively by analysts: Chinese companies are the reason why it was crushed

As Samsung loses its grip on the smartphone market, its appeal to investors is waning.

On Tuesday, international rating agency Fitch Ratings predicted that Samsung's position in the international smartphone market will be further weakened, while analysts slashed their target price for the company's stock and called on it to act now or it would be too late.

The reason why investors are not optimistic about Samsung's development prospects is mainly due to the rapid rise of cheap Chinese-made smartphones. Interestingly, earlier this year, some analysts believed that Chinese mobile phones were still a very distant threat to Samsung.

Nitin Soni, an analyst at Fitch in Singapore, expects Samsung's share of global smartphone shipments to fall to 25% next year, from 31% last year.

Sony warned that Samsung has lost its edge in attracting consumers as Chinese phone makers such as Lenovo and Huawei offer lower prices and meet the needs of most consumers. He further pointed out that Samsung's wearable devices and curved display phones are unlikely to change the overall decline.

Meanwhile, Mark Newman, a Hong Kong-based analyst at Bernstein Research, lowered his target price for Samsung shares from 2 million won to 1.65 million won (about $1,600). This is the second time this year that he has lowered his target price for Samsung. In addition, Newman also called on Samsung to make drastic changes in its smartphone strategy. It is reported that Newman was previously an employee of Samsung and has been optimistic about Samsung's development for many years.

Newman expects Samsung's profit margins to remain under pressure as the company begins to fight a price war at the low end to maintain market share against Chinese phone makers, who are becoming more aggressive in the sub-$200 smartphone market due to the lack of big-name competitors.

However, Newman believes that efforts to defend profit margins in the low-end market are futile. He criticized Samsung for being too greedy in defending profit margins and suggested that it should learn from its Chinese rivals and produce high-spec and low-priced products.

Newman estimates that Samsung's operating profit margin for smartphones will fall to 15.5% by 2015, from 23.3% in 2013. He also expects mobile phones to account for 47% of Samsung's total profits by 2015, compared with 67% in 2013.

Earlier this month, data provided by two market research institutions showed that Samsung is no longer the largest brand manufacturer in China and India, the two major mobile phone markets. In addition, Samsung's financial reports have been poor in recent quarters, and its smartphone performance has declined significantly. Some analysts are not optimistic about Samsung's prospects.

However, analyst Newman is still confident in Samsung. He believes that if Samsung puts Chinese competitors first, it will still be a formidable competitor in this field. Newman believes that if Samsung is no longer stubborn about defending the profit margins of low-end phones, it can create trouble for Chinese competitors by relying on cost and scale advantages.

“If Samsung really goes all in, I don’t think a lot of Chinese manufacturers will survive,” Newman said.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.