Samsung's bet on foldable phones faces major test with slimmer new model

Samsung Electronics launched new, thinner foldable phones, including the Galaxy Z Fold 7 at $1,999, as part of a premium strategy to counter Apple's market lead and rising Chinese competition. The company is prioritizing AI integration, partnering with Google to embed features like Gemini, aiming to establish leadership in AI-powered smartphones. While analysts acknowledge design improvements, they project foldables will remain a niche market due to high pricing and limited use cases, with Samsung's segment dominance already eroding from Huawei and Honor, and overall foldable shipments expected to remain flat. Samsung is also proactively managing supply chain risks from US tariffs and China's rare earth export curbs.

Analysis

Samsung Electronics is executing a premium-focused strategy with its new, thinner, and lighter foldable phones, including the Galaxy Z Fold 7, which saw a 5% price increase to $1,999. This move is a direct response to losing its global smartphone market leadership to Apple in 2023 and facing intensified competition from Chinese brands like Huawei and Honor. A core component of this strategy is a deep integration of AI through a partnership with Google, embedding Gemini features to differentiate its products, a contrast to Apple's in-house AI efforts which have reportedly faced delays. However, this product launch is met with significant headwinds and analyst skepticism. The foldable market remains a niche segment, accounting for just 1.5% of total smartphone sales, with research from Canalys forecasting flat or slightly declining shipments for Samsung in 2025. Furthermore, Samsung's dominance in this segment is actively being eroded by Chinese rivals. This mobile-centric challenge is compounded by a profit slump in its critical chip business, partly due to delayed AI chip supply to Nvidia. On an operational level, Samsung is proactively managing geopolitical risks by accelerating US-bound shipments ahead of potential tariffs and diversifying its rare earth supply chain away from China.

Key Decisions for Investors

• Investors in Samsung (KS:005930) should exercise caution, as the foldable launch addresses a niche market with flat growth projections and eroding leadership, while its core chip division faces separate profit pressures.
• The integration of Gemini into Samsung's new devices is a strategic win for Google (GOOGL), expanding its AI ecosystem's reach, while Qualcomm's (QCOM) position is reinforced by its Snapdragon 8 Elite chip powering the premium Fold 7.
• Despite mentions of delays in Apple's (AAPL) AI development, its market leadership remains secure, and this launch is unlikely to materially alter the competitive landscape in the near term.
• Samsung's explicit actions to mitigate US tariff and Chinese export curb risks underscore the critical importance of supply chain resilience as a key investment consideration across the global electronics sector.