Apple (AAPL) captured 87% of smartphone industry profits in the fourth quarter, despite accounting for only about 18% of total units sold in the period, a Wall Street firm estimated Wednesday.

Apple's profit margins are the envy of the industry, thanks to premium handsets like the iPhone X and iPhone 8 series, according to Canaccord Genuity. Apple's share of smartphone profits increased from 72% in the September quarter, it said.

"We believe strong sales and mix of the iPhone X will sustain strong gross margin dollars (for Apple) given the high price points and likely improving manufacturing efficiencies," Canaccord analyst Michael Walkley said in a report to clients. "Apple continues to grow its leading market share of the premium-tier smartphone market, with double-digit growth of its installed base during the (fourth) quarter, and believe the iPhone installed base exceeded 635 million exiting calendar 2017."

Market research firm Gartner said Apple accounted for 17.9% of smartphone sales to end users in the fourth quarter, putting it in second place behind Samsung, which grabbed 18.2% of the market.

Despite selling more units than Apple, Samsung came in second in smartphone operating profits with 10% of total industry profits, Walkley said.

For full-year 2017, Apple captured 14% of total smartphone sales to end users, while Samsung took 20.9%, Gartner said.

Apple is likely to face heightened competition from Samsung in the first half of 2018, Walkley said. Samsung just introduced a lineup of Galaxy S9 smartphones priced significantly below Apple's iPhone X.

The high price of the iPhone X, which starts at $999, is limiting demand for the handset beyond the early adopters, he said.

Apple shares were down marginally to close at 178.12 on the stock market today. In intraday trading, Apple hit a record high of 180.62.

Source: investors