“I Thought I was Your Favorite”
Corning (GLW) has been a glass supplier to almost all panel producers and has been a key supplier to Samsung’s smartphone business, with its Gorilla Glass® and Victus™ products and to affiliate Samsung Display, providing substrate product for LCD and rigid OLED displays. Normally, parent and affiliate tend to be on the same page as to both short and long-term goals, but over the last year or so, that relationship seems to be less cordial and more disruptive. There has been evidence that the decision made by Samsung Display to end its production of LCD displays and develop a quantum dot/OLED large panel product has not met with the kind of reception that SDC would have liked, and at times over the last year, rumors that Samsung would not be marketing a TV product using the new technology have surfaced and retreated a number of times, and since SDC and Samsung’s TV business are operated independently, both have had to make changes in the way in which they do business.
Samsung’s TV business has been buying much of its LCD panel product from other suppliers and has been increasingly using ODMs to develop and produce some of its more generic LCD based product. While this looked like a significant benefit early last year when LCD large panel prices were declining, it has become an increasingly more difficult market for large panel buyers as prices have been rising since the middle of last year. While Samsung’s TV business has now endorsed Samsung Display’s QD/OLED product, the relationship between the two divisions still seems a bit strained.
At the same time, Samsung Display and Samsung’s Mobile division have also been at odds over the use of UTG (Ultra-thin glass) that is used as a cover glass for its foldable smartphones. Samsung Mobile’s previous foldables, the Galaxy Z Fold 2 and the Galaxy Z Flip have both used UTG from Schott (AFX.GR) and processed by Dowooinsys (pvt), a company that Samsung Ventures has financed. This relationship was developed by Samsung Display, and at least the Schott agreement, extends for three years from inception, however, Samsung Mobile considered the Schott/DowooInsys product too expensive but had no alternative, given that Corning’s UTG product was still under development last year.
That seems to have changed with the new Galaxy Z Flip, where Samsung Mobile has agreed to split the cover glass for this next iteration between the Schott/Dowooinsus team and one comprised of Corning and eCONY (pvt), a Gumi based glass processor, which is in keeping with Corning’s stated timetable of UTG commercialization this year, and a nod to the Corning, eCONY process of laser cutting, rather than the wheel cutting used by the Schott/Insys team. Rather than give Samsung Display the option to use whatever process they thought best, Samsung Mobile will handle the UTG relationship with Corning, which indicates a bit of continuing tension between the two divisions.
Whether this is business as usual for Samsung divisions, or a new, more competitive relationship among Samsung Electronics’ divisions remains to be seen, but it does have the earmarks of a mandate from senior management focusing on profitability, and if that means going to an outside source for an equivalent but less expensive product, so be it. Competition from Chinese suppliers, a number of whom are subsidized by the Chinese government, has pressured a number of South Korean CE supply chain participants over the last few years, and pressure on LG (066570.KS) to divest its money-losing affiliate divisions has spurred a number of divestitures that we have noted. While it is hard to tell whether the instances mentioned above are part of a ‘new’ Samsung or just a more public reveal of what has been going on behind closed doors, it seems that Samsung’s affiliates can no longer take for granted that they will be the preferred supplier to other Samsung affiliates, which in the long-run is a good thing for Samsung and for consumers, who will hopefully see better pricing as a result.
Samsung’s TV business has been buying much of its LCD panel product from other suppliers and has been increasingly using ODMs to develop and produce some of its more generic LCD based product. While this looked like a significant benefit early last year when LCD large panel prices were declining, it has become an increasingly more difficult market for large panel buyers as prices have been rising since the middle of last year. While Samsung’s TV business has now endorsed Samsung Display’s QD/OLED product, the relationship between the two divisions still seems a bit strained.
At the same time, Samsung Display and Samsung’s Mobile division have also been at odds over the use of UTG (Ultra-thin glass) that is used as a cover glass for its foldable smartphones. Samsung Mobile’s previous foldables, the Galaxy Z Fold 2 and the Galaxy Z Flip have both used UTG from Schott (AFX.GR) and processed by Dowooinsys (pvt), a company that Samsung Ventures has financed. This relationship was developed by Samsung Display, and at least the Schott agreement, extends for three years from inception, however, Samsung Mobile considered the Schott/DowooInsys product too expensive but had no alternative, given that Corning’s UTG product was still under development last year.
That seems to have changed with the new Galaxy Z Flip, where Samsung Mobile has agreed to split the cover glass for this next iteration between the Schott/Dowooinsus team and one comprised of Corning and eCONY (pvt), a Gumi based glass processor, which is in keeping with Corning’s stated timetable of UTG commercialization this year, and a nod to the Corning, eCONY process of laser cutting, rather than the wheel cutting used by the Schott/Insys team. Rather than give Samsung Display the option to use whatever process they thought best, Samsung Mobile will handle the UTG relationship with Corning, which indicates a bit of continuing tension between the two divisions.
Whether this is business as usual for Samsung divisions, or a new, more competitive relationship among Samsung Electronics’ divisions remains to be seen, but it does have the earmarks of a mandate from senior management focusing on profitability, and if that means going to an outside source for an equivalent but less expensive product, so be it. Competition from Chinese suppliers, a number of whom are subsidized by the Chinese government, has pressured a number of South Korean CE supply chain participants over the last few years, and pressure on LG (066570.KS) to divest its money-losing affiliate divisions has spurred a number of divestitures that we have noted. While it is hard to tell whether the instances mentioned above are part of a ‘new’ Samsung or just a more public reveal of what has been going on behind closed doors, it seems that Samsung’s affiliates can no longer take for granted that they will be the preferred supplier to other Samsung affiliates, which in the long-run is a good thing for Samsung and for consumers, who will hopefully see better pricing as a result.
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