SEOUL— Samsung Electronics Co. SSNHZ 0.00 % said net profit for the second quarter fell 8% from a year earlier as sales of the company's flagship Galaxy S6 smartphone fell short of expectations.
The decline was the fifth straight year-over-year profit drop, as low-cost rivals from China and India continued to weigh on Samsung's market share and profit margins, particularly for midrange smartphone models.
Samsung's net income for the three months ended June 30 was 5.75 trillion Korean won ($4.9 billion), down from 6.25 trillion won in the year-earlier period, the company said Thursday.
As in previous quarters, most of the pain came in the company's once-highflying mobile unit. The mobile division's operating profit slid 37.6% to 2.76 trillion won in the second quarter from a year earlier.
In April, the company released its flagship Galaxy S6 and its curved-screen variant, the Galaxy S6 Edge. While the new phones were met by praise from analysts and reviewers, Samsung appears to have badly miscalculated how many Galaxy S6 Edge devices consumers wanted, leading to shortages of that device and unsold stock of the flat-screen Galaxy S6 smartphone.
Overall, the division's closely watched operating profit margin came in at 10.6%—down sharply from a margin of 15.5% in the second quarter last year, and roughly unchanged from the first quarter of the year.
Analysts estimate the average selling price for Samsung's smartphones to have dropped by more than 10% to below $300 in the latest quarter compared with a year ago, amid heightened cost competition from low-cost rivals in the region.
Rival Apple Inc., AAPL -0.32 % meanwhile, managed to keep a high price tag on its popular iPhones during the same period, with the average selling price of iPhones rising by more than $100 to $662.
Samsung's smartphones are expected to stay prone to further price cuts as the South Korean electronics giant struggles to differentiate its products from the growing pool of competing smartphone models.
In an attempt to cushion the continued slide in earnings, Samsung has advanced the timing for the launch of its flagship smartphone-tablet hybrid device, likely called the Galaxy Note 5 and focused on business users, by about three weeks to Aug. 13 from its usual launch period.
It is also releasing a larger version of the Galaxy S6 Edge at the event, according to people familiar with the matter, giving the company another chance to try to parlay the popularity of the curved-screen smartphone into profit.
Samsung's overall profit picture would have been even worse, but for another strong showing from the company's components business, which includes memory chips, application processors and display panels.
Semiconductors, in particular, saw operating profit surge in the second quarter by 83% from a year earlier to 3.4 trillion won.
A chunk of those profits came from memory chips, where Samsung has long dominated as the world's No. 1 manufacturer by sales. The unit got another leg up from its non-memory chip business, thanks to sales of its application processors—the brains of smartphones—to outside customers, and which it used to power its own line of new premium smartphones.
Analysts estimate that the non-memory chip business logged its first quarterly profit in more than a year, though Samsung doesn't break out details for the business unit.
Semiconductors have solidified their place as the main profit driver for the Suwon, South Korea-based company, accounting for 49% of overall profit in the second quarter, ahead of the mobile division's 40% contribution.
Overall, revenue for the technology giant in the second quarter fell 7.3% from a year earlier to 48.54 trillion won.
The company's cash position remained mostly the same, with about 61.8 trillion won of cash and short-term assets on its books.
Write to Min-Jeong Lee at min-jeong.lee@wsj.com
Source: Samsung Profits Hurt by Smartphone Price Declines
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