Business
Samsung reportedly calls for management review of its mobile business due to recent failures
A new South Korean media report says that Samsung has been conducting a management review of its mobile business this month, which is expected to end later this month. The report also reveals that the company could commence an audit of its mobile business.
Well, it’s not super surprising news as the Korean tech giant commences periodic reviews and special reviews of its many business units. However, the company’s periodic reviews are done every four to five years to examine or estimate the situation of business units implement measures to increase their efficiency.
According to TheElec, Samsung is conducting the review because of the poor earnings from mobile devices and supply chain management problems it is facing. The report also shows that Samsung is highly likely to miss its sales target for Galaxy S21.
It’s worth mentioning that the Galaxy S21 series is expected to have sold only 13.5 million units during the first half of the year. However, the Galaxy S series of old sold over 30 million units, while the Galaxy S20 series sold around mid-20 million units.
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TheElec sources also revealed that Samsung’s poor performance in 5G smartphones is also a reason for the review even as it was one of the first companies to launch 5G smartphones in 2019 but has fallen behind in market share to rivals in recent years.
Apart from this, well-known tipster FrontTron revealed that Samsung’s management review was being held since May. It means the company is well aware of its continuous reducing global smartphone sales and preparing to get rid off of supply imbalance.
The review could be done in light of Samsung Electronics vice-chairman Lee Jae-yong’s potential parole release later this month. The leader could be reviewing all core business units before his release to prepare to act accordingly when he is released, the sources said.
A Samsung spokesperson declined to comment on the matter. However, they added that the individual business units could review their own business practices without the top management conducting a review.
On March 28, market research agency DSCC predicted that this year’s global OLED sales would be $38.7 billion, down 7% from the previous year. Since Chinese display makers selling OLEDs at cheaper prices, demand for rigid Samsung smartphone OLEDs decreasing.
According to the report, smartphone OLED shipments by the application are similar to last year, but sales are expected to decrease by 8%. Possibly, it’s because of the decrease in rigid OLED sales and the decrease in average selling price (ASP).
Samsung Display
Smartphone OLED is expected to record 77% of shipment share and 78% of sales share in the entire OLED market this year. Smartwatch OLED is expected to account for 15% of shipments and 5% of sales. As revealed by Samsung Display, it’s expected to keep its market leadership this year as well.
Samsung D will reportedly supply OLED for all four models of the upcoming Apple iPhone 15 series, with a whopping share of 60 percent. The South Korean display maker is likely to see a three-digit YoY increase in monitor and automotive OLED shipments.
BOE Display
BOE’s OLED sales share is expected to rise from 9% last year to 13% this year. In the iPhone 15 series, BOE’s share was estimated at 18%. Compared to last year, DSCC explained that in the iPhone 15 series, the number of models that BOE supplies with OLED has increased to two, a regular type and a Plus.
LG Display
LG Display could increase its overall OLED market share from 20% last year to 21% this year. The expected market share of LG Display in the iPhone 15 series is 22%. The OEM supplies OLED only to the Pro lineup in the iPhone 15 series.
This year, LG Display’s share in the monitor OLED market is expected to be 35% based on shipments and 35% based on sales. The company’s share in the TV OLED market is estimated to be 85% based on shipments and 81% based on sales.
TV OLED
TV OLED shipments are expected to decline by 12% and sales by 15%. In addition, OLED shipments and sales required for augmented reality (AR) and virtual reality (VR), vehicles, laptops, monitors, and tablets are predicted to grow.
Samsung is one of the world’s largest chipmakers, which got badly affected by the global market downturn. In the fourth quarter of 2022, the market share gap between Samsung and TSMC further widened. TSMC managed to face the market loss with less drop in sales compared to Samsung Elec.
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According to a recent TrendForce report, TSMC grabbed a whopping 58.5 percent share of the foundry market, securing the first rank. Samsung Electronics maintained its second rank in the market with a 15.8 percent share, with a gap of 42.7 percent.
“TSMC was able to increase its market share as its foundry competitors underperformed. Samsung lost a large share of its orders as Qualcomm and Nvidia placed orders for sub-7nm semiconductors for flagship products with other companies.” – TrendForce
It’s worth mentioning that the growth and decline are not just limited to Samsung Electronics and TSMC. The entire global foundry industry posted a decline in revenue in Q4 2022 because foundry customers, fabless companies that specialize in semiconductor design, decreased their orders due to inventory issues.
Samsung and TSMC at the cutting edge of technology, saw quarter-over-quarter revenue declines of 3.5 percent and 1 percent respectively, while mid-tier foundry companies were hit harder. They were a 12.7 percent drop in revenue for third-place UMC, 27.3 percent for PSMC, and 30.3 percent for VIS.
Last but not least, China’s SMIC and Hwahong Semiconductor also recorded drops of 15 to 26 percent. In the aftermath of this, China’s Nexchip dropped out of the top 10 list, and DB HiTek, a mid-sized foundry company in Korea, joined the top 10 clubs instead.
2023 begins as a bad year for Samsung Electronics’ memory chip business as the division lost $2.3 billion in the first two months of 2023. According to koreajoongangdaily source, the company lost 3 trillion won in January-February, and it’s expected to continue throughout the first quarter of 2023.
According to the report, the company estimates that the operating loss could reach up to 4 trillion won by the end of the first quarter. Due to the global economic downturn, it’s going to be the first loss for the division since the fourth quarter of 2008.
“Internally, there was a report projecting up to 4 trillion won in operating losses from the memory chip business in the first quarter,” koreajoongangdaily source said.
Samsung Elec reportedly borrowed 20 trillion won from its Display division to help in the funding of semiconductor investments. The company said that it will maintain this year a similar level of capital expenditure as last year without any plan to “artificially” cut back production of semiconductors.
Among all divisions, the DV division is Samsung’s most profitable business, which was significantly affected at the end of last year. The decreasing semiconductor business is expected to get recovered only after the global shortage and economic downturn lessens.
In 2022, Samsung’s chip division brought in 23.8 trillion won of operating profit. The business’s operating profit came in at 8.5 trillion won in the first three months, 9.9 trillion won in the second and 5.12 trillion won in the third. However, it reduced by 97 percent YoY in Q4 as the division posted a 270 billion won profit.
As per TrendForce report, DRAM prices will likely slide 20 percent in the first quarter and another 11 percent in the second quarter, which already faced a 34 percent decline in 2022. Moreover, NAND flash chips will go down 10 percent in the first quarter and 3 percent in the second.
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