On the 9th of next month, Samsung Electronics will unveil its new foldable phone, the Galaxy Z 7 series. Samsung aims to maximize its market share in the foldable phone market by promoting its exceptionally thin design and the convenience of artificial intelligence (AI). However, the "price" has emerged as the most critical variable for the product's success. Considering Samsung Electronics' goal of making over 50% of premium smartphone sales foldable by 2025, forecasts suggest that increasing the product price will be challenging.
◇ The key to the success of the new foldable phone is the "price"
According to industry sources on the 27th, product pricing has become a significant concern for Samsung Electronics ahead of the Galaxy Z 7 series launch. One industry representative noted, "Internally, there seems to be a split between those who believe that the new product's slim design and enhanced performance due to AI justify a price increase and those who are cautious about the potential negative impact on market share that a price hike could cause."
Speculations about the price of the Galaxy Z 7 series are rampant. According to recent reports from foreign media like GSM Arena, the launch price in the European Union (EU) for the Galaxy Z Fold and Flip 7, set to be revealed at the Galaxy Unpacked event on July 9, is expected to be 100 to 200 euros (approximately 155,000 to 310,000 won) higher than its predecessor. Reports suggest that the retail price of the Fold 7 (512GB) could be 2,309 euros (3.67 million won), while the Flip 7 (512GB) could be estimated at 1,425 euros (approximately 2.26 million won). In contrast, there are reports that the price of the Fold 7 would remain the same as its predecessor, while the Flip 7 would see a reduction of 100 euros. German IT media WinFuture reported that the retail price for the Fold 7 (512GB) would be set at 2,119 euros (approximately 3.36 million won), and the Flip 7 (512GB) at 1,219 euros (approximately 1.93 million won).
◇ Three years ago, Samsung declared its "mass adoption of foldable phones"... Expectations are focused on the price reduction of the "Flip 7"
The industry believes that even if Samsung raises the price of the Fold 7, it will not be able to increase the price of the Flip 7. This is due to the declining sales of the Galaxy Flip series, which has recorded a downturn over the past two years. Sales of the Flip 6 last year were 2.89 million units, a 21% decrease compared to 3.66 million units of the previous Flip 5. Given this situation, there are analyses inside and outside the industry suggesting that a price increase would negatively impact market defense. Conversely, during the same period, sales of the Fold 6 reached 2.32 million units, an 11% increase compared to 2.09 million units of the previous Fold 5.
The expectation that Samsung will equip the Flip 7 with its self-produced mobile application processor (AP), "Exynos 2500," also supports the view that raising prices will be difficult. It suggests that cost reductions resulting from using its own chip may create the possibility for price decreases.
There are also numerous viewpoints asserting that increasing the price of the Flip product, which is cheaper than the Fold, would be challenging for Samsung to increase its share of the foldable phone market. In a press briefing held in Manhattan, New York, in July 2022, Roh Tae-Moon, acting head of the Mobile Experience (MX) division and the Device Experience (DX) division of Samsung Electronics, stated a goal to quickly realize the mass adoption of foldable phones in the global market, mentioning that "to achieve the goal of having over 50% of premium smartphone sales as foldable by 2025," price reductions for the products are inevitable.
According to the industry, the proportion of foldable phones in Samsung's premium phone sales was 15.5% in 2023 and is predicted to decrease by 3.3 percentage points (P) to 12.2% in 2024. If the price of the Flip 7 were to increase under these circumstances, there is a strong possibility that Roh Tae-Moon's goal, declared three years ago, would not be achieved. For the Fold 7, considering the price hike of Qualcomm AP, the chances of a price decrease seem nonexistent; however, the argument for lowering the Flip 7 price is reinforced.
◇ The final variable in pricing is the "tariff"
The last variable in pricing for the Galaxy Z 7 series is said to be the Trump tariffs. Although tariffs are imposed only on products released in the U.S. market, if they are set too high, there is pressure to align the global launch price to some extent with the U.S. price. U.S. President Donald Trump stated, "Starting at the end of June, I will impose tariffs of at least 25% on smartphones and electronic products produced overseas, including in Vietnam and China," adding that "not only Apple but also all smartphones produced abroad, including Samsung, will be subject to these tariffs."
There are assertions that Samsung Electronics has no reason to avoid price increases to avoid declining profitability due to high tariffs in the U.S. This is because the MX division accounted for 65% of Samsung Electronics' operating profit (6.6853 trillion won) in the last first quarter. If the profitability of the MX division worsens, it will impact Samsung Electronics' overall performance.