Samsung Electronics has completed a two-month redesign of the Galaxy Fold to fix embarrassing screen failures that forced its delay, allowing the Korean giant to debut its marquee smartphone in time for the upcoming sales season.
The world’s largest smartphone maker is now in the final stages of producing a commercial version but can’t yet pin down a date to begin sales, according to sources. Samsung pulled the device after several publications including Bloomberg News reported problems with test versions, such as screen malfunctions that emerged after a film on the display was peeled off.
Korea’s biggest company is trying to move past yet another product faux pas. It has now stretched the protective film to wrap around the entire screen and flow into the outer bezels so it would be impossible to peel off by hand, said the sources, who have seen the latest versions. It re-engineered the hinge, pushing it slightly upward from the screen to put it flush with the display to help stretch the film further when the phone opens.
That tension makes the film feel harder and more a natural part of the device rather than a detachable accessory. The consequent protrusion, almost imperceptible to the naked eye, may help reduce the chance of a crease developing in the middle of the screen over time.
Samsung is keen to salvage its reputation after cancelling the April 26 launch of the device, which had a US price tag of €1,750, when folding displays on review models exhibited problems.
It had counted on the world’s first mass-produced foldable smartphone to challenge Apple and widen its lead over Chinese rivals such as Huawei Technologies. Instead, some models developed issues after mere days of use: Bloomberg’s test unit failed to function properly after the plastic layer covering the screen was removed, and a small tear developed at the top of the hinge where the gadget opened.
Samsung will soon start shipping major components for the Galaxy Fold, including the display and battery, to a main plant in Vietnam for assembly while the company debates a launch date, according to one source. But the company is unlikely to unveil its re-upholstered Galaxy Fold during next month’s Unpack event in New York for the new flagship Note 10 phone.
The Fold’s postponement marked a setback for a company that had bet on its latest innovation to extend its dominance and ignite a stagnating smartphone market. But the Korean-based firm was keen to avoid the kind of fiasco it suffered in 2016 when it recalled the Note 7, which showed a tendency to burst into flames. Samsung also finds itself in no rush to launch the Galaxy Fold after Huawei postponed the roll-out of its own foldable device.
Meanwhile, Samsung is likely to say second-quarter profit more than halved when it reports preliminary earnings tomorrow, as a drop in memory chip shipments to China’s embattled Huawei exacerbated a price-squeezing supply glut.
The quarterly result would be the firm’s lowest in nearly three years, with the prospect of an earnings recovery still some quarters away as a period of oversupply continues unabated amid a broader slowdown in tech markets, said analysts.
The world’s biggest supplier of Dram and Nand memory chips is also the world’s largest maker of smartphones, a market where chip client Huawei is second place. Companies worldwide have been forced to restrict business with Huawei to comply with US trade sanctions on a company Washington deems a security risk.
“How much Huawei will use chips ahead is definitely a swing factor in prices,” said analyst Jay Kim at Sangsangin Investment and Securities.
When there’s not many players that can buy chips instead of Huawei, then Samsung has to cut prices to sell them
Though chip earnings took a hit from reduced Huawei custom, Samsung’s smartphone business is likely to benefit from a drop of as much as 40% in international sales of Huawei handsets. So far, however, Huawei has strong enough support at home in the world’s largest smartphone market to retain its global ranking. Even so, selling chips brings in most of Samsung’s profit, over two-thirds, and a saturated smartphone market and falling demand from data centres have pulled prices down.
Prices for Dram chips, which provide devices with temporary workspaces and allow them to multi-task, are unlikely to rebound in the second half of the year, said analyst Avril Wu at tech researcher TrendForce.
Moreover, she said, it will be difficult for Samsung to clear its inventory until the first half of 2020.
TrendForce estimates Dram prices in the three months through June fell 25%. Tomorrow, Samsung is likely to flag a 60% decline in April-June operating profit, according to Refinitiv SmartEstimate.