Good news but a little too soon…we must wait until Q4

Galaxy S 4 took 47% of the $400 premium market in May

Our current sell out number for the Galaxy S 4 is 6.9 million units for May. Samsung took 47% of the $400+ premium market.
Compared to the Galaxy S III the trajectory is quite different, ramp up was phenomenally fast. Samsung took an approach like Apple or Nokia planning component supply and production well ahead of market demand. But We don’t think volumes will be able to grow significantly beyond 7 million units per month until late Q3 when the price points reach the sweet spot and seasonality is favourable.

Rationale

The $400+ market has grown impressively over the last year but growth has a ceiling. The ultra-premium market can only be enabled by ultra-premium subsidies that operators find hard to fund lately.We’ve observed in developed markets that operator subsidy has to be replenished before being spent heavily so the budget release has become cyclical.
Samsung’s next task is not to beat the iPhone or HTC One, but to wisely choose when to sell in huge volumes with heavy marketing.

Conclusion

Before the iPhone 5S is released the operator subsidy spend will be limited. We expect a huge surge in the $400+ market in Q4 this year and that’s when the Galaxy S 4 will again achieve record volumes. Overall we believe the Galaxy S 4 will sell 1.8~2.0 times more volume than its predecessor the Galaxy S 3.