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Taiwan component makers worried about drops in Samsung global smartphone market share

Daniel Shen and Sammi Huang, Taipei; Adam Hwang, DIGITIMES [Monday 8 July 2013]

Samsung Electronics, currently the world's largest smartphone vendor, has continually downwardly adjusted its shipment targets by 10-20% during the past two quarters, causing Taiwan-based supply chain makers to worry about decreased orders from Samsung due to its slipping global smartphone market share, according to those Taiwan-based makers.

Among Android smartphone vendors, Samsung has faced increasing competition from Sony Mobile Communications, LG Electronics and Huawei Device, the sources indicated.

In adoption of smartphone components, Samsung gives first priority to in-house-produced processors, display panels, image sensors and memory and then releases orders for components with relatively low technological specifications or those for which it does not have in-house production capacity or its in-house capacity is not enough, the sources pointed out. This means outside supply chain makers have to compete with Samsung subsidiaries or internal business divisions, but such competition is actually difficult even if supply chain makers' products and quotes are really competitive, the sources analyzed. In addition, Samsung has supported many South Korea-based component makers and given priority in procurement to them, the sources noted.

For Taiwan-based supply chain makers, Samsung sets many unreasonable requirements in cost and delivery time, the sources indicated. However, some China-based component makers are actively competing for orders from Samsung, for they hope to gain experience in supply chain management, the sources noted.

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