Samsung Suppliers On the Ropes?
Samsung’s (00530.KS) success in the smartphone market is well-known, however that does not mean that every shot the company takes in the smartphone space, and there are many, is a success. In particular, Samsung’s January release of the Galaxy S21 flagship line, which consisted of three models, has not fared well so far this year and recent data for 1Q smartphone shipments and sales indicates that none of the Galaxy S21 models made it into the top 10 in terms of volume share, and all three combined registered only a 6% revenue share, while Apple’s iPhone 12 models (excluding the Mini) combined saw a 32% share of smartphone revenue in 1Q. Samsung did have models that did make the top 10 in volume but they were all part of Samsung’s A Series of mid to low priced models, not the flagship line.
While this in itself is certainly problematic for Samsung, it is also challenging for many of Samsung’s component suppliers, particularly as 1Q tends to be among their strongest quarters. A compilation of 1Q results from 15 of Samsung’s major South Korean smartphone component suppliers shows that only four companies showed a y/y increase in sales and operating profits. Nine companies showed lower y/y sales, even when compared to last year’s COVID impacted 1st quarter and ten of the companies in the list saw reduced operating profits or continuing losses. The effect of Samsung’s share decline in the high-end market are apparent to those suppliers who provide high-performance parts, while those who compete directly on prices saw some benefit.
While this in itself is certainly problematic for Samsung, it is also challenging for many of Samsung’s component suppliers, particularly as 1Q tends to be among their strongest quarters. A compilation of 1Q results from 15 of Samsung’s major South Korean smartphone component suppliers shows that only four companies showed a y/y increase in sales and operating profits. Nine companies showed lower y/y sales, even when compared to last year’s COVID impacted 1st quarter and ten of the companies in the list saw reduced operating profits or continuing losses. The effect of Samsung’s share decline in the high-end market are apparent to those suppliers who provide high-performance parts, while those who compete directly on prices saw some benefit.
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