Samsung-Apple battle: the gap is closing

Samsung’s surprise surge in 2016 fourth quarter profit may further close the gap with its US competitor Apple.

As the high-profile Samsung-Apple battle continues, the Korean company reported sales revenue of 53 trillion won (US$44 billion) with an operating profit of 9.2 trillion won, for an impressive operating margin of 17.36 per cent. The margin rose from 16.2 per cent in the second quarter of 2016 and represented its best result during the past two years.

Apple has always led the Korean tech giant in terms of operating margin. In Q1 2015, the difference between the two companies was 18.82 percentage points, with Apple and Samsung reporting 31.51 per cent and 12.69 per cent, respectively. In Q4 of same year, the gap further widened with Apple reporting 31.86 per cent, and Samsung, 11.52 per cent.

However, Samsung started catching up in 2016.

Apple saw a continuous drop in its operating margin from 27.67 per cent in Q1 to 23.82 per cent in Q2 and 19.19 per cent in Q3, while Samsung saw its rate increase from 13.42 per cent in Q1 to 16. 2 per cent in Q2 and 17.36 per cent in the last quarter, although it did plummet in Q3 to 10.87 per cent as a result of the Note 7 crisis.

Samsung’s prosperity in Q4 2016 was driven by a boom in its semiconductor business, improvement in display sales, and the success of its Galaxy S7 series, sources said.

Apple has yet to disclose its financial results for the last quarter, but it is estimated that the company’s profit margin will come in around 20 per cent, with a slight improvement from the previous quarter, which will bring down the gap between the two tech giants to a record low of 3 per cent.