Samsung shares reach record high of W1.43 mil.

By Cho Mu-hyun

Shares of Samsung Electronics and Apple, who have been locked in a patent war, have shown signs of decoupling, with the Korean firm’s shares skyrocketing while its U.S. rival’s continue on a downward spiral.

Prices for Samsung shares hit an all-time high of 1.437 million won Friday, up 20,000 won after closing at 1.417 million won Thursday, which was the highest level in more than five months since it closing at 1.41 million won on May 2.

The Korean company’s stock price dropped for a while following a court’s verdict in August that favored Apple in a California patent case between the two. It started to recuperate in September thanks to strong smartphone sales.

It continued to soar thanks to the firm’s announcement of record high operating margins for the second and third quarters.

Its American counterpart, in contrast, posted its highest ever stock price of $702.10 on Sept. 19 following its victory against the Galaxy series maker. However, its shares have declined around 20 percent since then to $561.7 as of Wednesday.

A market analyst said supply problems for the iPhone 5, losses in court battles outside the United States and a weakened image as an innovator have contributed to the price drop.

“Samsung Electronics is shipping as many of its flagship models like the Galaxy SIII and Galaxy Note II as they want,” said HMC Securities analyst Kim Sang-pyo over the phone. “It has changed the release date of the Galaxy SIV to February or March to continue its streak and strengthen its line-up. Our valuation for its stock price high is 1.75 million won.”

Kim said Apple shares won’t rise at the spectacular rate seen in the past due to lowered performance expectations.

“The first estimated shipment for the iPhone 5 was 50 million but we have adjusted that to between 32 to 35 million. The problem lies in the production time: compared to the iPhone 4, the iPhone 5 requires a substantially more complicated manufacturing process,” he said. He said Apple won’t be able to maintain its 30 percent operating margin due to parts suppliers raising their prices.

The American firm’s strict quality control of its products have caused complaints from original device manufacturers: Taiwan’s Foxconn said the iPhone 5 was one of the most complicated devices it has produced.

“Samsung’s products successfully filled the void left by Apple’s late release of the iPhone 5. As Samsung’s mobile division has become stronger and other in-house divisions are seeing a boon as well, especially DRAM, application processors and other chips,” said Song Kang-ho, an analyst at Daishi Securities by telephone. “We estimated that it will post 30 trillion won in operating profit for this year, and 36 trillion next year.”

“The current smartphone market is a duopoly of Samsung and Apple. But Samsung seems poised to play the aggressor next year. Apple will grow at a lower rate than before due to the saturation of the market while Samsung will rise higher,” he added.

Daewoo Securities analyst Song Jong-ho said that the Korean firm’s global smartphone market share will rise to 32 percent by the end of the year compared to 21 percent for its American rival.