According to a new report from The Elec, Samsung may have nearly 50 million smartphones in stock just waiting to be sold. Interestingly, the majority of unsold phones are Samsung’s mid-range Galaxy A smartphones; which were consistently among the world’s best-selling devices in previous years.
A stock of 50 million devices represents more than 18% of the estimated delivery volume of 270 million units in 2022. Usually, only about 10% of total annual shipments remain in distributor inventory at any given time. Having almost twice as many unsold units is therefore a worrying sign for Samsung; and the smartphone industry as a whole. The Korean giant will probably have to apply significant reductions on most of its models to be able to sell its stocks.
Weak demand for affordable Samsung devices suggests that people buying phones in this price range are paying the price for the global economic situation. Some consumers may also be more tempted by smartphones from certain competitors; such as Xiaomi, Redmi or Poco, which generally offer better value for money. Poco will also launch two new mid-range smartphones tomorrow, the Poco X4 GT 5G and Poco F4 5G.
Samsung finds itself with 50 million smartphones on its hands
However, we know that the Galaxy A continues to appeal to most fans of the manufacturer, since they represented more than 50% of Samsung smartphones sold in 2021. “The mid-range A-series has been the main workhorse of Samsung’s smartphone catalog over the past few years;” said Liz Lee, principal analyst at Counterpoint. Unfortunately, the things seem to have turned for Samsung.
The report by The Elec now announces that Samsung would have manufactured 20 million smartphones per month; from January to February 2022. To better respond to the drop in demand and high inventories; the Korean firm would have cut its production in half to just 10 million units in May. The issue, as has often been the case for nearly two years now, are the Covid-19 lockdowns in China, Russia’s invasion of Ukraine and rising commodity prices.
Samsung may have overestimated consumer demand when it set a production target of 334 million for 2022 late last year. However, the unexpected slowdown forced the company to lower shipment targets to 270 million, according to The Elec’s source. In total, it would be nearly 30 million fewer Samsung smartphones that would be produced this year. Samsung’s component orders from its suppliers have also plunged 30 to 70% from April to May; due to the drop in demand.