Samsung sees profits fall 60 per cent

Fierce competition in the smartphone market has resulted in Samsung's quarterly profits falling by 60 per cent.

Slowing sales of its Galaxy line of smart devices are believed to have come about as a result of increased competition from Chinese manufacturers and a resurgent Apple, with its recently launched iPhone 6.

Samsung said it expects its operating income to be around 4.1 trillion won (2.5 billion) for the three months to September. This was markedly below analyst expectations of earnings of 5.2 trillion won. Quarterly sales amounted to 47tn won, below analyst estimates of 50.3tn won.

Smartphone sales accounted for nearly 70 per cent of Samsung's operating profit in 2013. The firm publishes its full financial results later in the month.

"Smartphone shipments increased marginally amid intense competition," Samsung said in a statement. "However, the operating margin declined due to increased marketing expenditure and lowered average selling price."

The South Korean tech firm said new products were in the pipeline and it was "preparing new smartphone line-ups featuring new materials and innovative designs, as well as a series of new mid-to-low end smartphones."

The company faces rivalry from Apple at the top-end of the market but has also seen market share at the lower end eaten away by Lenovo and Xiaomi in China. In emerging markets, such as India and China, Samsung's lead has been usurped by local rivals.

The firm had moved the launch of its Galaxy Note 4 to late September from October in a bid to avoid clashing with Apple's iPhone 6 launch. The Note 4 went on sale in China last month in an attempt to kick-start sales in that region.

Despite below par figures, shares in Samsung increased by 1.6 per cent in Seoul after the warning was released.

The firm is also considering opening a new $15 billion semiconductor factory in South Korea to tap into demand for memory chips. Construction of the factory could start next year.