Ailing margins for Samsung as phone demand weakens

"Weak demand" for its devices has forced Samsung to increase marketing expenditure, the company has admitted.

Older and low-end models have been occupying warehouse space and, despite always having enormous promotional outlay, the dip in demand is causing a dip in profits, accelerating the company's gradual profit decline.

Samsung now anticipates earnings of around 24 per cent less this quarter than figures recorded a year ago, with an 8-11 per cent drop in underlying sales.

European competitors are eating into Samsung's share of the low- and mid-range market, the company claims, while Chinese consumers are ignoring its 3G products, choosing to wait for a 4G phone. 5in and 6in phablets have also chomped into the Korean firm's 7in and 8in tablet sales.

Alongside traditional market factors though, Samsung has also highlighted currency fluctuations as a financial woe. The won has been gradually creeping up in value against the dollar, affecting all Korean exporters.

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Samsung will hope to pick things up with the release of the Galaxy Note 4 later in the year.