Samsung has stated it is boosting production to meet supply so as to reduce opportunity cost.
South Korean electronics giant Samsung Electronics has disclosed that its newly launched Galaxy Note 7 is registering stronger than expected demand, causing global supply constraints.
Strong demand for the device has surpassed initial expected sales for the premium device.
“As pre-order results for the Galaxy Note 7 have far exceeded our estimates, its release date in some markets has been adjusted,” said Samsung in a statement.
Samsung is hoping the strong demand for its smartphones will help it maintain the surge in its sales momentum and boost its earnings in the second half of the year.
It is to be seen how its sales will be affected by Apple launching its new devices in the coming months.
Although surging smartphones sales could lead to another fabulous quarter thanks to its earnings from mobiles, it also risks missing out on potential revenues should the shortage persist.
In 2015, its inability to supply sufficient curved screen for its Galaxy S6 edge smartphone cost the company dear in opportunity costs, said investors and analysts.
On its part, Samsung has disclosed it is trying to boost production aimed at meeting demand “as early as possible”, without any further elaboration.
“Whatever the company gets out of the Note 7 will be a bonus factor, since what the market has been betting on for the second half is a pickup in earnings from the display and semiconductor businesses,” said Lee Jin-woo, fund manager at KTB Asset Management.
He went on to add, “Considering Samsung’s track record I think the supply problem will be resolved quickly.”
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