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Trouble could be brewing for Samsung’s smartphone business

November 2, 2015, 4:44 PM UTC
Samsung Holds Shareholders Meeting
A man using a mobile phone as he walks past a Samsung Electronics Co. advertisement displayed at the company's Seocho office building in Seoul, South Korea, on Friday, March 15, 2013. Samsung Electronics's President of visual display Yoon Boo Keun and President of mobile communications J.K. Shin were appointed as co-chief executive officers following the company's shareholder meeting today, joining Vice Chairman Kwon Oh Hyun, who will also retain his position as co-CEO. Photographer: SeongJoon Cho/Bloomberg via Getty Images
Photograph by SeongJoon Cho — Bloomberg/Getty Images

Samsung’s smartphone sales are up this year over 2014 figures, but trouble may be brewing for the South Korean tech company.

Although Samsung celebrated year-over-year mobile profit growth in October for the first time since 2013, it’s thanks in part to the company selling cheaper phones, according to The Wall Street Journal.

Samsung sold 6.3% more phones in 2015’s third quarter, or 84 million devices, which is more than competitors Apple (AAPL) and Huawei combined, the newspaper reported. However, only 40% of Samsung’s smartphone sales were for devices costing over $301, compared with 55% of sales in 2014, according to data from Counterpoint Technology Market Research.

Phones that cost $200 or less now make up 38% of total units shipped at Samsung, the newspaper reported, up from 30% this time last year.

Tom Kang, an analyst at Counterpoint, told the newspaper that Samsung’s decision to push lower-priced products may not be a boon for long: “Chinese brands are already hitting very hard in this price segment in online channels,” he said.

“It remains to be seen if Samsung can continue volume momentum in next few quarters to translate these shipments into sales consistently in this highly price-competitive segment,” Kang added.