It expects to make an operating profit of 8.4 trillion won ($7.9bn) for the January-to-March quarter, down 4% from the same period last year.

 

This follows a 6% decline in operating profit in the previous quarter.

 

The drop indicates the challenge faced by Samsung to boost its earnings² amid falling prices of smartphones. 

 

Young Park, an analyst³ with Hyundai Securities said that Samsung's profits were being hurt by falling margins⁴ for smartphones as well as a slowdown in the growth rate of the sector⁵.

 

 

The success of Samsung's Galaxy⁶ range of smartphones has been one of the biggest drivers of its growth in recent years. 

 

But is has been facing rising competition as companies look to tap into the sector's growth. 

 

Rivals Apple, HTC and Chinese manufacturers such as Lenovo, ZTE and Huawei have all been looking to boost their market share.

 

That has prompted vendors⁷ to reduce prices to attract more customers, putting pressure on their profit margins.

 

Earlier this year, Samsung had warned that it expects competition in the sector to "intensify⁸" further.

 

One analyst said that as profit margins in the sector continue to fall, Samsung may need to cut costs to sustain its earnings growth.

 

"What Samsung needs to do this year for additional growth are things like cost reduction and reducing marketing⁹ costs," said Greg Roh, an analyst with HMC Investment and Securities.

 

"In some sense, Samsung has no way to prevent a decline in its earnings without improving internal efficiencies."

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