Digitimes Research: Samsung Note 7 issues may help Apple to regain number-1 crown in 4Q16

Joseph Tsai, DIGITIMES, Taipei 0

With a series of battery fires reported with Samsung's Galaxy Note 7 and its latest announcement telling customers to turn off the smartphones immediately to prevent further incidents, Digitimes Research senior analyst Luke Lin expects the move to seriously impact Samsung's overall smartphone production for the second half of 2016 and allow Apple, the number-two smartphone vendor worldwide since 2011, to regain the number-one crown in the fourth quarter.

Samsung had projected to manufacture 12-13 million Galaxy Note 7 smartphones for the second half. However, after the first incident reported on September 1, Samsung began to adjust its projected manufacturing volume and cut the number by around half in late-September.

Samsung originally expected its battery replacement program to maintain Galaxy Note 7 demand in the fourth quarter, and therefore shifted most of the projected manufacturing volume to the fourth quarter. However, with replacement devices still seeing the same problem, Samsung has made a decision to cease production of the smartphone.

Since Samsung is unlikely to be able to re-design and re-release a new flagship smartphone to replace the Galaxy Note 7 before the end of 2016, Lin believes that Samsung's overall smartphone production for the fourth quarter will drop from 75-80 million units estimated after Samsung cut its Note 7 manufacturing volume by half, to only 70-75 million units.

This will bring Samsung's smartphone orders very close to those of Apple, which is also expected to place orders for 70-75 million smartphones in the fourth quarter; giving Apple an opportunity to surpass Samsung in shipments and become the largest smartphone brand vendor worldwide. The last time Apple was the largest smartphone vendor was in the fourth quarter of 2010.

Lin noted that Samsung will remain the largest smartphone vendor worldwide for the full year with shipments reaching up to around 300 million units, higher than Apple's estimated 210 million units.