Samsung and LG, the nation’s top two smartphone-makers, are feeling the pinch of enhanced competition on their home turf, a market that used to be called a “tomb” for foreign handset-makers. 

Despite being squeezed between Apple’s iPhone and cheaper phones from Chinese runners-up in the global market, the two Korean tech giants have long enjoyed dominant market positions at home. 

But more recently foreign brands are fast gobbling up their market shares, forcing Samsung and LG to turn to less profitable budget phones.  

According to SK Telecom, three iPhone models made up a combined 50 percent of the telecom carrier’s premium phone sales online, while Samsung’s two Galaxy Note 5 models were the only Korean phones in the five most selling list. 

In the mid-range, about 300,000-500,000 won ($250-430), Google’s Nexus 6P (34.6 percent) and Nexus 5X (25.8 percent) were top players, followed by SK Telecom’s Luna (28.4 percent) and Samsung Galaxy A5 (9.7 percent). 

In the meantime, the top-selling phones in the low-end category -- cheaper than 300,000 won -- were crowded with Samsung and LG phones, according to the leading telecom carrier with more than 50 percent of market shares. 

“The premium and mid-price markets are dominated by iPhone and Google phones. If Samsung and LG stick to cheaper phones to defend market shares, they will see further declines in profitability,” said an industry source. 

Together with improved awareness about cheaper phones, industry watchers pointed out that subsidy cuts for new phone purchase that started last year have also hit hard high-priced Samsung and LG phones.  

Local handset makers, together with telecom companies, had offered generous subsidies to attract new customers, while Apple maintained a no-subsidy policy here. 

Following the subsidy cap revision, customers showed less resistance to iPhones, while many of them turned to cheaper phones. 

In October, iPhone’s market share in the nation’s handset market soared to 30 percent, compared to some 5 percent before the law revision. 

Chinese handset-makers that have struggled to find a footing here are also increasing their presence.

Early this year, Huawei released the Nexus 6P smartphone into Korea together with Google. Its new smartphone Y6, priced at 154,000 won, has also become a hot-seller selling some 5,000 units in a week after its Dec. 16 launch. 

By Lee Ji-yoon (jylee@heraldcorp.com)