Samsung has had to fend off local phone makers in China and India, but in the second quarter they were surpassed by Micromax in India and by Beijing-based Xiaomi in China. Consumers have been looking beyond Samsung's Galaxy smartphones to low-cost devices manufactured by local phone makers.
Micromax, which was founded only five years ago, took the No.1 position in India from Samsung, accounting for 17.5 percent of phone sales in the second quarter, ahead of Samsung's 15.1 percent, according to Counterpoint Technology Market Research.
"Xiaomi and other smaller players in India are catching up very fast," Cho Woo Hyung, a Seoul-based analyst at Daewoo Securities Co., told Bloomberg. "If you lose market share, it's hard to get it back, so Samsung will continue to churn out as many handsets as possible to retain its dominant share in the smartphone market."
Canalys, another market research firm, released figures Tuesday showing Xiaomi, which has been selling phones for only three years, leapfrogging Samsung to gain a 14 percent market share in China for the second quarter, with Samsung coming in a close second with 12 percent. Xiaomi is little known in Europe and the U.S. because it has sold almost all of its phones in mainland China.
"Xiaomi does have the potential to be a disruptive force beyond China and international vendors should take note," said Jessica Kwee, an analyst for Canalys, said in a statement.
Last week, Samsung reported a 20 percent decline in net profit for the second quarter from a year earlier, its first decline in three years.