Changing Component Market Landscape
A second typhoon blowing from Samsung Electronics that will shake the smartphone component market is coming. Samsung Electronics has decided to introduce in-cell touch displays and Substrate Like PCB (SLP) substrates in its strategic smartphones to be launched in the first half of next year. The SLP, a next-generation substrate integrated with semiconductor packaging technology, will be used by Samsung Electronics for the first time. The latest decision of the world’s largest smartphone manufacturer is expected to hit the component industry hard as a whole.
According to industry sources on August 6, Samsung Electronics will start to adopt the SLP in the Galaxy S9 to be released next year. The company will use the SLP as a main substrate that connects smartphones’ core parts such as application processors (APs) and NAND flash and DRAM chips.
Samsung Electronics has already started preparing to gear up for production with multiple South Korean PCB manufacturers, including Samsung Electro-Mechanics, to keep supply and demand in balance. These companies are bringing in production facilities. An official from a PCB producer said, “We are preparing for SLP mass production, targeting Samsung’s upcoming smartphones.”
The SLP, a main substrate for next-generation smartphones, is an advanced type of the current mainstream High Density Interconnected (HDI) PCB technology. Integrating the HDI PCB with chip packaging technology, the new substrate has a better efficiency by increasing the number of layers while reducing its area and width.Smartphone makers need to make the best use of a space for new smartphones. They should increase the battery capacity and make their smartphones do and mend while using various high performance components. It means that they need to enlarge the battery and miniaturize the substrate at the same time. The SLP is considered a component that meets the two requirements. This is why Apple will also introduce the SLP in its new iPhone which is due for release in this fall.
As Apple and Samsung Electronics, the two smartphone makers that lead the global market, have decided to change their substrates to the SLP, there will be a sea change in the smartphones’ main substrate industry. In particular, the South Korean industry is expected to be hit harder than any other countries. In other words, companies which don’t have the semiconductor packing technology can die out in the future. With Samsung’s latest decision, the downstream industry will be caught in a maelstrom of sudden changes.
In fact, there are 10 companies supplying the HDI to Samsung Electronics for its smartphones. However, only four out of the 10 companies are preparing to produce the SLP for South Korea's electronics giant due to high technology entry barriers. When mass production and supply begin in earnest, the companies will show a clear switch of fortunes.
Samsung Electronics is planning to use the SLP from the Galaxy S9 that comes with its Exynos AP. Since there is a gap in technology, the company will still use the HDI in models that use Qualcomm’s AP. With the current trend, however, the SLP is expected to spread rapidly after passing an initial introduction stage.
Samsung Electronics is the world’s largest smartphone producer that sells 400 million units a year. The company’s decision to adopt a new technology and change its strategy has so much power to completely turn the existing market structure upside down. This is why the touch screen industry is also in an extremely precarious state. The previous model of the Galaxy S9 is equipped with an in-cell touch organic light-emitting diode (OLED) display. The so-called Y-OCTA display doesn’t need a touch screen panel (TSP). As Samsung’s demand for the TSP will disappear, the related component and material market is expected to shrink. Such aftermath will now spread to the PCB industry as well.