By Elizabeth Koh

SEOUL -- The foldable phone was supposed to upend the smartphone industry, but so far it has flopped.

Pitched last year as novel introductions to a staid industry over the past decade, folding phones promised portability with displays that opened up to the size of tablets yet when closed could still perform most functions of a smartphone.

But just as device makers were expecting sales to surge, the global coronavirus pandemic hit and sheared away early enthusiasm. Buyers stuck at home didn't need a multifunctional gadget on-the-go, while lockdowns closed many retail shops where buyers could be wooed by the flashy phones up close. The economic shocks also have left fewer people craving a high-price device.

Globally, 1.74 million foldable devices were shipped from the first launch last September through June 30, according to market tracker Canalys. That is a fraction of prepandemic forecasts and a rounding error in an industry that shipped 1.28 billion smartphones during the 12 months ended that same date.

The latest entrant arrives Tuesday with Samsung Electronics Co.'s unveiling of the Galaxy Z Fold 2, the second iteration of its flagship foldable-screen model. It has a reinforced folding hinge and an even larger 7.6-inch main display. The price remains the same as its predecessor at $2,000.

The South Korean tech giant, having invested billions in developing foldable technology, has a lot riding on making the new handsets a success. The company kicked off the mainstream offerings of such phones last year with the first Galaxy Fold, though it experienced an inauspicious debut.

In April 2019, days before the Galaxy Fold was set to hit shelves, several tech reviewers reported their test units had malfunctioned, with screens cracking, bulging or blacking out. Samsung delayed the release for about five months, though criticisms remained after the relaunch. The phone-repair website, iFixit, which had found design weaknesses with the initial Galaxy Fold test units, noted the revamped device's additional reinforcements but described it as still seeming "alarmingly fragile."

Samsung, based on internal tests, claimed the Galaxy Fold could be opened and closed some 200,000 times before breaking. But CNET, the tech-review site, found the hinge stopped working after 120,000 folds. A Samsung spokesman declined to comment on durability issues.

So far, Samsung has shipped only 1 million foldable-screen units since it started selling the devices last fall, according to Canalys, the majority of which were the company's second foldable offering, the lower-priced Galaxy Z Flip.

Samsung now represents about three-fifths of the nascent foldable market. Huawei Technologies Co. and Lenovo Group Ltd.'s Motorola are the two other notable rivals, with shipments of 500,000 and 200,000, respectively, according to Canalys.

Phone makers had expected initially modest sales, but even those forecasts have proven to be lofty. Samsung had originally aimed for 6 million foldable-device shipments in 2020; halfway through the year, they have hit one-tenth of that target.

The disappointment comes at a tough time for the industry. Overall smartphone sales slumped 20% in the first half of the year, according to research firm Strategy Analytics. At one point, more than half of the major telecom carriers' stores in the U.S., a key market for premium smartphones like foldables, closed just as new offerings like the Galaxy Z Flip and the new-generation Motorola Razr were hitting shelves.

Huawei had to scale back the global release of its Mate X foldable phone -- launched in November and sold for $2,400 -- because of a U.S. export ban that restricted its access to Google's popular software lineup. Even in China, where the phone is available, sales have been weak. The company has lost tens of millions of dollars on the Mate X rollout, according to a Huawei executive's comments reported by Chinese media.

Part of the drawback for foldable phones is the price. In an industry where already high smartphone prices were pushing people to delay upgrades, the sticker shock of foldable phones has dissuaded all but the most ardent early adopters, said Shengtao Jin, a Canalys analyst.

Most consumers have never seen or held a foldable phone. The inability to handle the new devices in-person at stores meant few got the chance to see the appeal, said Tom Kang, a research director for Counterpoint Research.

"The longer you play with the phone, the more positive you become," Mr. Kang said.

In a July earnings call, Samsung executives blamed the pandemic for decreased demand across the board, but said the newer innovations with 5G and foldable devices could help stir up sales as the economy recovers. "The market demand has started to show signs of gradual recovery from June," said Lee Jong-min, a Samsung vice president in its mobile unit, during the earnings call.

In a brief virtual launch Tuesday, a Samsung official touted what he called "experiences that aren't available on a regular smartphone," including the phone's flex mode, which allows users to watch videos or take photos with the phone partially opened. The livestreamed presentation also emphasized continuing partnerships with Google and Microsoft Corp. to enhance various multitasking modes on the device.

The Galaxy Z Fold 2 allows the use of multiple apps simultaneously on the main 7.6-inch display. When shut, the phone has a second, exterior display of 6.2 inches -- longer than Apple Inc.'s base iPhone 11 model -- which can be used for the typical tasks of using most apps, texting and checking emails. Having two displays means people being photographed can also check their poses as if they were taking a selfie. Like Samsung's other premium offerings, the Galaxy Z Fold 2 offers 5G capability.

Write to Elizabeth Koh at Elizabeth.Koh@wsj.com