Samsung Reviewing Its Mobile Business
While Samsung’s (005930.KS) Vice-Chairman Lee Jae-yong’s legal team is pushing for the courts to release the billionaire from his 2.5 year prison sentence by placing him on parole, the company’s current management has continued a special review of the company’s mobile unit in light of weak results from the company’s flagship Galaxy S21, which was released in late January this year. Typically, Samsung Galaxy S series smartphones sold over 30m units, while last year’s Galaxy S20 sold between 23m and 27m units and this year’s series is thought to have sold a bit over 13m units, which has burdened Samsung’s ability to meet its smartphones sales targets this year.
Also under review in the mobile division are Samsung’s 5G smartphone sales, which have fallen behind Apple (AAPL), and Chinese brands Vivo and Oppo (pvt), despite Samsung’s early lead in the category. Samsung’s mobile supply chain is also in question, as shortages of certain components have the potential to limit smartphone sales, and the company’s relationship with application processor supplier Mediatek (2454.TT) has soured as Samsung’s leverage with the company dwindled along with smartphone sales. According to our data Mediatek processors have appeared in only one Samsung model this year, while in six models in both 2020 and 2019.
Samsung officials declined to comment on the review, but added that each business unit can conduct their own review without top management being involved, however we believe this review is being done by Samsung’s Business Support Task Force, the organization that was formed in 2017 to replace the Future Strategy Office when Lee Jay-yong was originally jailed, as that group had been accused of orchestrating the bribery scandal that jailed the vice-Chairman and led to the impeachment of the then President of South Korea.
Also under review in the mobile division are Samsung’s 5G smartphone sales, which have fallen behind Apple (AAPL), and Chinese brands Vivo and Oppo (pvt), despite Samsung’s early lead in the category. Samsung’s mobile supply chain is also in question, as shortages of certain components have the potential to limit smartphone sales, and the company’s relationship with application processor supplier Mediatek (2454.TT) has soured as Samsung’s leverage with the company dwindled along with smartphone sales. According to our data Mediatek processors have appeared in only one Samsung model this year, while in six models in both 2020 and 2019.
Samsung officials declined to comment on the review, but added that each business unit can conduct their own review without top management being involved, however we believe this review is being done by Samsung’s Business Support Task Force, the organization that was formed in 2017 to replace the Future Strategy Office when Lee Jay-yong was originally jailed, as that group had been accused of orchestrating the bribery scandal that jailed the vice-Chairman and led to the impeachment of the then President of South Korea.
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