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Samsung Galaxy S4 deemed a winner: Shipments seen topping early estimates

Published Apr 5th, 2013 11:40AM EDT
Samsung Galaxy S4 Sales

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Samsung (005930) has gotten to the point where the success of its next-generation flagship smartphone is a foregone conclusion. The South Korean vendor has managed to stir up Apple-like hype for the Galaxy S4, and consumers around the world are eagerly anticipating its launch. According to Bernstein Research analyst Mark Newman, Samsung is ready to respond to the huge demand and is building the handset at a rate of 10 million units per month, which is even higher than Bernstein’s lofty early estimates.

“Galaxy S4′s production rate of 10M units/month appears stronger than our projections despite some potential supply issues in March,” the analyst wrote in a research note picked up by Barron’s.

And just as important is the estimation that despite the Galaxy S4’s more expensive build compared to the Galaxy S III, Samsung should be able to maintain similar margins thanks to the fact that more components in the new handset are built by Samsung’s own component arms.

“We estimate that, while 53% of Galaxy S3 BOM cost was internal, 58% of Galaxy S4 BOM costs should now flow through Display/Semis (Memory & S.LSI),” Newman wrote. “We estimate that, while 64% of Galaxy S3 BOM cost was within the Samsung Group (i.e. SEMCO, Samsung SDI, etc.), 68% of Galaxy S4 BOM costs should now flow through the Samsung Group. Additional profits to Samsung group entities should benefit Samsung Electronics in the form of increased equity income.”

The analyst estimates that Samsung’s gross profit margin for the Galaxy S4 will be 46% compared to the Galaxy S III’s 48% margin. “We believe the Galaxy S4 positions Samsung Electronics for continued strong earnings growth this year,” Newman wrote.

Zach Epstein
Zach Epstein Executive Editor

Zach Epstein has been the Executive Editor at BGR for more than 10 years. He manages BGR’s editorial team and ensures that best practices are adhered to. He also oversees the Ecommerce team and directs the daily flow of all content. Zach first joined BGR in 2007 as a Staff Writer covering business, technology, and entertainment.

His work has been quoted by countless top news organizations, and he was recently named one of the world's top 10 “power mobile influencers” by Forbes. Prior to BGR, Zach worked as an executive in marketing and business development with two private telcos.