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Why Apple’s Camera Competition with GoPro Could Benefit Samsung

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Feb. 3 2017, Published 1:31 p.m. ET

Multipurpose smartphones threaten standalone cameras

Apple (AAPL) and fellow high-end smartphone makers Samsung (SSNLF) and Microsoft (MSFT) are increasingly upgrading cameras in their products as they try to appeal to action camera enthusiasts, but they are also complicating the picture for standalone camera brands like GoPro (GPRO), Nikon, and Canon (CAJ).

Market intelligence firm Tractica estimates that 24 million action cameras will be shipped by 2021 from 7.4 million in 2015.

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Parts suppliers to reap the benefits

But the camera arms race is expected to yield gains for smartphone components suppliers, especially makers of advanced camera lenses and memory chips. Samsung, Sony (SNE), and Toshiba are among the parts suppliers expected to reap gains from the race to enhance camera capabilities in smartphones.

But Samsung has in its portfolio advanced memory chips and displays for smartphones, making it a particular beneficiary of the growing demand for large storage in smartphones, as Millennials are using their handsets to record almost every moment of their lives. Toshiba and Micron (MU) are other suppliers of memory chips that also stand to gain from the uptick in demand for local storage in smartphones.

Sony, on the other hand, supplies image sensors, which would make it a particular beneficiary of the competition in upgrading camera features in smartphones.

Strong device component sales

For Samsung, the sales of smartphone parts are helping the company cushion its bottom line from the impact of slowing growth in the smartphone market. According to IDC, global smartphone market growth slowed to 0.6% in 2016. As the smartphone market growth slows, market leaders like Apple and Samsung have come under pressure from smaller rivals that are using more aggressive tactics to gain market share.

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