Samsung, the world's biggest smartphone maker, is suffering a financial decline in the face of intense competition from Apple, as well as new Chinese brands.

In a preview to earnings due out later this month, Samsung said today its quarterly profit was estimated to have fallen to its lowest level in more than three years - dragged down by weak sales of its new Galaxy model.

Compared to a record-high of £6 billion ($9.5 billion) in 2013, the company is set to report earnings of just £2.4 billion ($3.8 billion) for July to September this year.

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Samsung (headquarters in Seoul pictured) is set to report its lowest quarterly earnings in more than three years. It comes as the bigger screen on Apple's new iPhone 6 and iPhone 6 Plus has been linked with luring customers away from the previously bigger Galaxy phone

The South Korean electronics giant became the biggest smartphone brand on the popularity of earlier Galaxy models.

But the bigger screen on Apple's new iPhone 6 has been linked with luring customers away from the larger Galaxy range.

While in China, local brands are making inroads into Samsung's business.

Analysts have repeatedly cut forecasts of Samsung's profit this year as Galaxy sales lagged behind expectations.

They claim earnings in the quarter ending in September could suffer their biggest decline in Samsung's recent history.

In today's report, Samsung said the median forecast of July to September operating income was £2.4billion ($3.8 billion).

MORE BAD NEWS FOR SAMSUNG: IS GOOGLE PLANNING A 'PHABLET'? It's been almost a year since Google released its Nexus 5, and rumours about the next model have been ramping up in recent weeks. The latest reports claim the device, dubbed the Nexus 6, has a 5.9-inch screen and will run Android L - the firm's next-generation operating system. This would put the device in direct competition with Apple's phablet 5.5-inch iPhone 6 Plus. It would also put it on par with Samsung's flagship Galaxy Note 4, which has a 5.7-inch display. Other rumoured specifications include a 2MP front-facing camera, and camera on the rear that could range between 8MP and 13MP. Advertisement

That was below the median of analysts' expectations of £3 billion ($4.9 billion), according to FactSet, a financial data provider.

If it happens, this would reflect a 60 per cent plunge from the record-high £6 billion ($9.5 billion).

The decline in Galaxy sales has hurt demand for Samsung components such as an advanced display called OLED.

'The operating margin declined due to increased marketing expenditure and lowered average selling price,' Samsung said. The company said it 'cautiously expects increased shipments of new smartphones and strong seasonal demand for TV products'.

Analysts said the bigger iPhones released last month will likely take away American customers who favored the Galaxy's bigger screens.

In emerging markets, such as India and China, Samsung's smartphone sales were overtaken by local rivals.

Samsung estimated sales for the July to September period declined 20 per cent from a year earlier to £27.4 billion ($44 billion), slightly below analysts' expectations of £29.3 billion ($47 billion).

In January, analysts estimated Samsung's third quarter operating income would exceed £5.8 billion ($9.3 billion). That expectation has been steadily lowered to about half this month.

Quarterly profit from its mobile business, which reached £3.9 billion ($6.3 billion) a year earlier, is forecast to be a little over £1.2 billion ($1.9 billion).

Analysts claim the bigger iPhones released last month (shown) will likely take away customers who favoured the Galaxy's larger screens. In emerging markets, such as India and China, Samsung's smartphone sales have been overtaken by local rivals

The latest news comes despite the launch of the Samsung Galaxy S5 (pictured) earlier this year, which was received by mostly rave reviews. The Galaxy S5 handpicked features from its competitors and put them all into a single handset, with some calling it a 'superphone'

The company needs to revamp its handset designs, said Lee Seung-woo, an analyst at IBK Securities.

'Rather than seeking stability, Samsung should seek to distinguish [its phones] with Galaxy's design policies,' he said. 'The iPhone 6 will be a significant threat to Samsung.'

The company moved the launch of the Galaxy Note 4, a large smartphone with a stylus, to late September from October after Apple unveiled the iPhone 6 and 6 Plus.

It also began sales of the Galaxy Note 4 in China last month, getting an early start in the world's most populous country before Apple.

Last month, Samsung also received upbeat initial responses to its Galaxy Note Edge smartphone, a smartphone with a curved side screen that can display weather, news, apps and other information.

But the supply volume for the Edge smartphone will be limited, likely not giving a big boost to its earnings, analysts added.

With growth momentum in smartphones sagging, Samsung is moving to step up its presence in the semiconductor business.

This week, Samsung announced a £9 billion ($15 billion) investment plan to build a new semi-conductor fabrication plant in the South Korean city of Pyeongtaek.

The construction will begin before the summer next year and begin operations during the second half of 2017.