Samsung is still No. 1 in smartphones, but Chinese manufacturers are gaining ground.
The Korean electronics giant saw phone sales in the third quarter decline by 14 percent year over year, its worst performance ever, according to researched published Thursday by Gartner. The slump is due in part to battery problems that caused some of Samsung's Galaxy Note 7 phones to explode or catch fire.
Samsung was forced to recall the Note 7 twice and eventually decided to cease production of the phone.
"The decision to withdraw the Galaxy Note 7 was correct, but the damage to Samsung's brand will make it harder for the company to increase its smartphone sales in the short term," said Gartner analyst Anshul Gupta in a statement.
Still, Samsung held on to the top spot. The company sold 71.7 million smartphones in the third quarter of 2016.
Apple, which earned the No. 2 spot, sold 43 million smartphones in the quarter. Apple released its iPhone 7 this year, but the company still experienced a 6.6 percent decline in the quarter with its biggest loss of sales occurring in China, according to Gartner.
Overall, shipments of smartphones increased by 5.4 percent to 373 million units in the third quarter of 2016, up from 354 million in the same quarter last year. Only Chinese manufacturers Huawei, Oppo and BBK Communication Equipment experienced growth.
Huawei is now the third most popular smartphone manufacturer in the world, though 80 percent of its sales are confined to China. Gartner also noted that Google's Android software is the most prominent smartphone operating system with nearly 88 percent of the total market.