Samsung Electronics (005930.KS) and BOE (200725.CH) have had a contentious love-hate relationship.  There have ben times when Samsung has purchased multiple millions of LCD display panels from BOE as they do from a number of large panel suppliers each year since Samsung Display (pvt), Samsung’s display production affiliate, exited the large panel LCD business years ago.  At the same time, Samsung Display has sued competitor BOE a number of times for IP infringement and competes directly with BOE for business with Apple, SDC’s largest external customer.  Despite the ongoing battles between large panel producers, Samsung Electronics must procure LCD TV set panels from outside sources in order to maintain the company’s production of roughly 40m sets each year, a large portion of which are LCD type.
In recent months, Samsung Electronics and Chinese supplier BOE have been at odds over advertising fees that have kept Samsung from purchasing LCD panels from BOE. Such fees are charged by Samsung to suppliers for including the panel manufacturer in Samsung’s advertising, with the idea that the cost of the advertising should be borne by all of  those who benefit from it.  This is a fairly standard practice in the industry and can influence where logos are placed, what type of advertising is featured, and a variety of other issues, all of which are part of volume and price negotiations.  In May, when BOE and Samsung managements last met, they were unable to agree on such fees, which we believe BOE does not believe  it should be paying.
It seems that BOE is going to try again later this month and will be meeting with Samsung in Korea to try to develop a plan for supplying panels to Samsung once again.  They hope to fill in a gap caused by a Samsung rule that keeps it from purchasing more than ~30% of its TV set panels from a single panel producer.  This is a result of the fact that LG Display (LPL) sold its Guangzhou, China fab to Chinastar (pvt) at the end of March.  As Samsung had already been purchasing LCD panels from Chinastar (~23%) and LG Display (13%) last year, when Chinastar took over the Guangzhou fab, it has the potential to push Chinastar’s total over 30% and Samsung needs to keep that total at 30% or less.  We assume BOE is aware of that issue and is trying to use it to gain entry back into Samsung’s good graces.
BOE is expected to propose that it supply Samsung Electronics with 20m panels over the three-year period between 2026 and 2028.  Additionally, in this round of negotiations,  BOE is expected to agree to pay a portion of the advertising costs, but what BOE proposes and what Samsung is willing to pay for the displays is still going to take some negotiating on BOE’s part.  Samsung does have the option of increasing purchases from its other suppliers.  Whether the ongoing lawsuits enter into the discussions remains unclear, especially as those suits tend to be between Samsung Display and BOE, not Samsung Electronics, but BOE seems intent on regaining its place in Samsung’s supplier roster, from which it was missing in 2024.  If nothing else, we give them credit for their determination.

It seems that Samsung Electronics (005930.KS) has been in negotiations with Perplexity AI (pvt) to pre-load Perplexity Search on the 2026 Galaxy S series flagship smartphone line.. This would give users the option to choose an alternative to Google’s (GOOG) Gemini search, which is the current default.  Google pays Samsung a large fee to have Samsung devices present Gemini as the default AI search tool and to integrate Gemini into Samsung applications.  Samsung is also expected to make an investment in Perplexity as part of Perplexity’s current funding set for $500m at a valuation of $14b
We believe the crux of this deal is not that Samsung is following in Apple’s (AAPL) footsteps and diversifying its AI focus away from a single player.  That would seem obvious, especially given the recent ruling against Google’s search monopoly, but rather we see it more as Samsung’s way of broadening its offerings to user’s, not forcing them to use a particular AI model, but to offer a number of options.  Not only does this seem attractive to users, who might have a preference, but also pits Ai model vendors against each other which will allow Samsung a bit more pricing leverage when it comes time to begin charging consumers for AI use.  Samsung has indicated that all AI in its consumer products will be free through 2025 but hinted that such a policy might change in 2026, at which point Samsung will need to focus on price.  Samsung currently gets a ‘fee’ from Google to make Gemini the default and receives a portion of any Gemini premium model subscriptions that come through Samsung devices. 
Thus far (tentative) the Perplexity deal does not seem to include subscription fees for Samsung, which makes us suspect that the objective is as much to pressure Google on price than to generate income, but it would also be hard to imagine that Samsung would spend the R&D dollars to integrate Perplexity into its applications without some sort of compensation.  That said, Perplexity’s recent deal with Motorola (992.HK), with the Perplexity AI being integrated in Motorola applications and the default for Motorola AI, did not include sharing subscription revenue, more to increase Perplexity’s user base, so the possibility is that while Samsung’s and Perplexity’s objectives are a bit different, the deal makes sense to both.
As we are still in the early stages of AI and even earlier stages of incorporating AI in consumer devices, there is little to indicate whether consumers see AI as a reason to upgrade their phone, above and beyond what they might have done without AI, so the question remains as to what pricing models consumer electronics brands might use when it comes time to charge for more generic AI.  Will it be tiered pricing for cloud-based models while on-device models remain free, with a few ‘free’ (Premium You Tube) incentives thrown in as Google does for their high-end models, or will it follow the DeepSeek (pvt) path of charging different rates during peak and off-peak hours?  Sooner or later the cost of implementing AI into a variety of applications, especially more than one AI model brand, will have to get paid for and CE brands will have to test consumers as to their ‘Fee Flexibility’, and that could be problematic once the novelty of AI begins to wear off a bit.  If it turns out that the average consumer is not willing to pay for generic AI, brands will have to rely on the ‘AI Upgrade Cycle’ to pay for  AI integration and R&D costs, likely a relatively poor scenario.

In November of 2021 Samsung Electronics and the city of Taylor, Texas signed an agreement  for a large semiconductor project, after Samsung received offers from a number of cities around the US as part of the country’s $6.4 b CHIPS ACT designed to bring semiconductor production back to the US.  The first of two plants and support buildings and infrastructure were originally slated to be completed during the 2nd half of last year.  In July of 2022 the government of Taylor expanded the tax incentive agreements, however by the end of 2023 Samsung announced that there would be a delay in the opening of the plant, moving it from 2H 2024 to 2025, although it was thought that Samsung was also upgrading the plant to 2nm production to compete with other foundries.
However, as it is rare that plans, especially for such a large project, meet early timelines, Samsung’s construction has been slower than expected and the plant 1 start up date was pushed back again to 2026 as construction has been on hold for the last few months a result of a weak semiconductor market.  This has caused the Taylor city government to amend its original tax incentive plans, which were a bit open ended, to push Samsung more intensely to move forward with the project.  Taylor made the following changes to the plan:

• Samsung will start bringing in process equipment by the end of 2026
• Taylor capped its reimbursements to Samsung for plan reviews and inspections at $9m, down from $25m previously.
• Samsung must complete 6m ft2 of permanent and temporary building space by the end of 2026 and another 1m ft2 by 2028.

While these are certainly not draconian measures, they do indicate considerable frustration with the pace of Samsung’s project development, especially given how aggressive other cities and regions were when wooing Samsung to a new US location (Genesee County, NY – Goodyear, AZ – Queen Creek, AZ – Austin, TX).  Samsung is facing a weak semiconductor market , a variable tariff situation, weak consumer demand, and an administration that looks to reduce previous administration semiconductor spending, making the large capital expenditures needed for this project problematic, but will have to meet at least these new goals if they are to receive the tax breaks they need to control costs.  That said, the bigger question is whether the current administration will rescind already promised CHIPS capital, which would be a far more onerous situation than the amended Taylor tax incentive plans.  Of course, Samsung can always decide to sell the plant and have someone make it into an AI data center…

video of plant under construction
https://www.instagram.com/reel/C_Y-eyWxYBd/?utm_source=ig_web_copy_link

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​We don’t usually check TV Set pricing bi-weekly, but with the Memorial Day holiday next week, we thought Samsung (005930.KS) might be adjusting prices to move some of the TV set inventory that had been building up before the Trump bilateral tariff announcement and its subsequent postponement.  While we still check pricing on Samsung’s older premium TV models our focus is on 2024 and 2025 models, given that 2023 models are only sporadically available .
2024 models have been in circulation in the US for 441 days, about a year and a quarter, while the 2025 models have been available for less than 2 months.  OLED models are similar with 2024 models available in the US for 404 days and the OLED models for only 40 days.  That said, Samsung’s 2024 Mini-LED/QD TV set line saw the largest declines, with prices of some models declining more than 30% over the last two weeks, however we note that many of those sets seeing steep declines over the last two weeks are not even at their lowest point for this year, having seen a large price increase between the middle of April and early May.  We make the assumption, although unconfirmed, that Samsung had assumed that some tariffs might be assigned to these sets and raised prices to compensate (in advance), but then found that there would be no additional tariffs and lowered prices back to a more normal level.  Either that ot Samsung’s inventory levels for these models was excessive and now needs a bit of stimulus to move volume.
Whatever the reason, the chart below shows how aggressive, both to the upside and to the downside, Samsung has been with it’s 4K Mini-LED/QD line pricing during this year.  The two peaks and dips represent changes of ~30% from top to bottom.  We note also that the last two weeks are the first time Samsung has begun to lower prices on 2025 models.  We expect that after the holidays those models that have seen discounts recently will find their way back up to those initial price points until either the tariff rules change again, or inventories are high enough that Saamsung feels compelled to move levels lower a bit.
Wee don’t envy those that must set TV set pricing given the tariff volatility and the current fear of a self-generated recession, especially given the inventory pull-ins that have been a part of the CE space this year.  While we expect there will be more sabre rattling from the WH, we expect the show of power that was exhibited has now transitioned to actually trying to get some sort of agreements signed that will show that Trump’s tariffs were a success.  As we have noted previously, the agreements are tenuous at best and are mostly for show because when it gets down to consumers, they don’t care if China says they will buy 10% more soybeans, unless it means that the price of soybeans will be less at the supermarket.  CE products are no different.

The smartphone business is a tough one.  With hundreds of brands looking to catch a consumer’s eye and feature sets that grow longer with each new model, brands struggle to find something new and exciting each new model cycle.  Cameras were big a few years back, with phones having up to 6 cameras, but multiple cameras began to take up room needed for other components, so the fad moved from camera numbers to camera resolution, with current high-end phones in the 200MP resolution class.  To put that into perspective a 200MP camera has 16,384 x 12,288 pixels in a 1” x 1.2” package (18,369 Pixels per Inch).  But the challenge continues, as AI throws another variable into the smartphone mix.
It would seem that brands could be a bit wary about how AI will play out on mobile devices as it is quite difficult to tell whether the Ai flavor-of-the-month is pushing consumers to buy a new phone, so Samsung (005930.KS) has taken another track, and thin is in.  The just announced Samsung Galaxy S25 Edge is a mere 5.8mm thick, a 29.3% reduction from this year’s Samsung Galaxy S25 Ultra flagship smartphone. Here are just a few of the gushingly positive comments the tech press has made about the just announced Samsung Galaxy S25 Edge, their newly designed ‘super thin’ smartphone.

• "Thinner than a credit card..." - The Economic Times
• "Samsung's Galaxy S25 Edge is already turning heads in the tech world...for its sheer thinness." - The Economic Times
• "The S25 Edge is one of Samsung's thinnest flagships to date." - Techloy
• "The Shockingly Thin Samsung Galaxy S25 Edge Feels Great to Hold..." - PCMag

But while ‘thin’ might be the new rallying cry for smartphone designs, thin has been around for a long time, and the 5.8mm thick Galaxy S25 Edge is barely a contender for thinnest.  The earliest ‘thin’ phone we could find was the Samsung U100 that was released in February of 2007, 18 years ago, while this baby was a fat 5.9mm thick, it was certainly the first that met our criteria of being under 6mm.  That said, the real winners are the pack of contenders at the Wegovy-like 5.1mm, a staggering 12% thinner than the new Samsung S25 Edge!  In fact all of the smartphones that were 5.1mm (the smallest we can find) were released 10 years ago in 2015, a period in time when there was less smartphone hardware, less heat generation, and smaller batteries to take up space inside the case.  5.1mm is 0.2” or a bit less than ¼ of an inch.
We are sure that the ‘thin’ trend will have some sustainability, at least until something else comes along, as Apple (AAPL) (see below) is expected to be releasing the iPhone 17 Air, a substitute for the iPhone Plus model, with the iPhone 17 Air rumored to be only 5.5mm thick.  If both Samsung and Apple follow the trend, almost all others will join until one of the three largest components, the battery, the display, and the camera modules hits a limit.  Batteries can be made thinner by increasing the length and width, which, in theory, should make it easier for the battery to dissipate heat, but at the same time the thinner phone allows less room for the thermal interface that transfers the battery heat to the frame of the phone, so it’s a tradeoff.  The display itself is quite thin but the connector that attaches the display to the internal circuit board is also a limiting factor, and lastly the camera module needs a certain amount of depth to operate properly, also a gating factor.
All in, while thin is in currently, we expect thin as a smartphone feature to run its course relatively quickly unless primary component producers are able to work dimensional magic without compromising performance.  There is also the feeling of holding the phone in your hand when you use it, which changes with thickness and weight, but in a device that must fit into a pocket, less is more.

​As we noted yesterday Samsung Electronics (005930.KS) was expected to release what might turn out to be the replacement for the long-lived Samsung Galaxy S Plus flagship smartphone that has been a part of the company’s flagship line-up on an off since 2011.  While Samsung and many other brands have strict rules about suppliers and employees leaking information about a product before its release, leaking’ information about upcoming smartphones has become both a marketing tool and a game of cat and mouse. As can be seen by our comparison of yesterday’s (pre-release) feature set and today’s actual feature set, much of the key information about the Galaxy S25 Edge was already circulating and turned out to be largely correct.
Below we show our feature set list from yesterday and the actual feature list from the release.  We highlight those features that were not correct in yellow.  As can be seen, we were off by 3/100ths of an inch on the length and 1/100th of an inch on the width.  The Edge can handle both Sim types, not just one as we expected, the display has an LTPO (Low temperature Poly-Oxide) backplane (we were unsure if it would be LTPS or LTPO), and the initial price will be at the low end of our expectations at $1,100 for both memory configurations.  Other than those errors, the device features seem to have been well telegraphed.

The feature set is mostly as expected and even a bit better, the price is exactly between the price of the S25 and the S25 Ultra and the same price as the S25 Plus (512GB).  Of course lower would have been better, but in the case of the S25 Edge it seems Samsung is trying to update design rather than create a new price category.  The Galaxy FE (Fan Edition), which was released in September of last year, creates a lower-cost bridge between the Galaxy S25 series and Samsung’s mid and lower price tier lines.

Samsung (005930.KS) has been producing a ‘plus’ model of its flagship Galaxy S line on and off since 2011, substituting Galaxy Edge, Galaxy Lite, Galaxy Active and even the Galaxy FE in the years when the company did not release a Galaxy S+ version, yet since 2017 the Galaxy Plus model has appeared each year along with the standard Galaxy S and Galaxy Ultra models of its flagship line.  Tomorrow, Samsung will announce the Galaxy Edge, a new and improved Edge that has the opportunity to replace the Galaxy S Plus going forward.
The Galaxy S Plus has been the underperformer of the three flagship models, and this year Samsung is looking to see if a new Galaxy Edge model might be a better value for consumers than the S Plus going forward.  There are lots of Galaxy Edge features that have been leaked or speculated on, so we put together a comparison of the current Galaxy S25+ and the upcoming S25 Edge.  We note that the Edge feature list could change upon its release.  We note also that the concept behind the Edge is a thinner, lighter, sleeker’ phone with most of the features of the Plus, with less cameras but higher resolution ones.

According to suppliers, of the 37.7m Galaxy S25 series phones to be produced this year, the standard Galaxy S25 will represent 36.1%, the Ultra, 46.2% and the Plus only 17.89% based on expected demand, so the question will be whether the new Galaxy 25 Edge will be able to outsell the Plus.  If the Edge catches on with consumers, we expect that the Galaxy Plus will join the Samsung Neos, the Samsung Minis, and the Samsung Actives, all of whom have been sent to that farm upstate where all of the disabled and sickly hamsters are happily living out their retirement days.

Samsung Electronics (005930.KS) announced that it agreed to purchase the non-medical division (audio) business of Masimo (MASI), a company known for its healthcare products and an ongoing legal battle with Apple (AAPL) over the use of its wearable pulse-ox technology.  The purchase, which is expected to close before the end of this year will make Samsung’s Harman division the largest consumer audio company and will add to Harman’s strong presence in the automotive A/V market.  As shown below, Harman, which Samsung purchased eight years ago for $8b (a hefty 37% premium at the time) is a heavy-weight in both the consumer and automotive audio markets, and with the additional brands owned by Masimo, will extend its footprint in both markets.
The Harman division of Samsung, while a small part of sales (4.3% in 1Q ’25) and op profit (4.5% in 1Q ’25) is an adjunct to Samsung’s automotive business, which includes OLED displays (Samsung Display (pvt)), infotainment processors, image sensors (driver safety), DRAM & NAND for ADAS, and MLCC (Multi-layer ceramic capacitors).  While we don’t have access to detailed data on the non-medical part of Masimo’s business, we know that in 1Q of this year the company produced $146.7m in sales and generated a $6m pre-tax loss[1], somewhat better than 1Q ’24 where sales were $153.2m and generated an $18.5m loss. 
Samsung is paying $350m for the Masimo assets, which we believe is between 0.5x and 0.7x annual sales, a substantial discount to more typical 0.6x to 1.1x for these types of companies, although when Masimo purchased what were then the audio assets of Sound United () for $1.025b, the multiple was 1.6x to 1.7x.  Current long-term CAGR for segments in the audio space remain high (see below) but we believe those are optimistic, even so it seems Samsung was able to purchase these assets at a significant discount.  If they are able to leverage the Masimo businesses as they did with Harman, they should be able to move most of these new brands to profitability as they fall under Samsung’s broad advertising campaigns and substantial reach into Asia, where growth in the audio space is highest.


[1] Excluding all impairment charges.

As Samsung Electronics’ (005930.KS) 2025 premium TV line has only been available for ~40 days, we did not expect that prices would have changed from their initial levels, however we expected to see some price pressure on older (2024) models as production wanes for last year’s models and shifts to the 2025 line.  The big question was whether the typical price reductions for the previous year’s Tv set line would be offset by tariff costs.  We cannot answer the question fully yet, but in Samsung’s 2024 4K Mini-LED/QD line, where we would typically expect some price erosion, prices rose by 28.6% over the ~30 day period, as shown in Figure 1, bringing them back to levels seen at the beginning of this year.  Similarly, the entire 2024 4K premium TV set line (includes both Mini-LED/QD and QD only) saw a 20.1% price increase.  The 2024 8K line did not see much of a price change (+1.8%), while the 2024 QD only sets saw a 7% price increase, even as the offerings for about 1/3 of thoses line are no longer available.
Samsung’s 2025 OLED TV set line, which has been available for ~ one month followed a more typical early pattern and saw no price change during the period, however the 2024 OLED line did.  While the high and mid 2024 OLED price tier models saw a modest 2.9% decrease in price, as one might expect, the low-end models saw the opposite, rising 27.9% in less than 30 days.  Typical monthly price moves for most OLED models are +/-1.2% and while there have been bigger monthly moves than the average, this month’s increase was the largest ever for this segment of the line.
There are always a number of factors at work when it comes to pricing, particularly inventory levels, component pricing, FOREX, and consumer demand, but now we have the added factor of tariffs, which seem to change on a moment’s notice.  We cannot pin down the price movements we have seen here to a particular factor, but we expect there will be considerably more volatility in TV set pricing as existing on-shore inventory gets worked down.  As Samsung’s sets are assembled primarily in Mexico, for the time being they are exempt from more recent tariffs, as long as regional (Chinese components) sourcing does not exceed 40%.
This gives Samsung the ability to (if so desired) maintain low pricing while sets from Hisense (600060.CH), and TCL (000100.CH) rise, capturing incremental volume, however it seems that Samsung is moving prices up, despite the exemptions.  While this will be beneficial in the short-term if it is sustained, it will do little for shipment volumes and customer satisfaction.  With Chinese TV set brands competing aggressively for share in all markets, Samsung gains the price advantage for a while.  Whether they choose to use it to regain share is still an open question.