Impossible to Replace
Samsung Electronics showed the highest sales growth in China despite the Chinese government’s retaliation over the deployment of the THAAD U.S. anti-missile defense system in the first half of this year among other overseas businesses. The company’s main export items – semiconductor chips and displays – are supplied as intermediary products that are irreplaceable with Chinese products so it enjoyed the growth in performance boosted by the boom in the Chinese market.
According to Samsung Electronics on August 16, the sales in China stood at 19.27 trillion won (US$16.86 billion) in the first half of this year, up 14 percent from the same period a year ago. The figure is nearly 5 percent points higher than the sales growth of other regions, including the U.S. with 9.4 percent, Europe with 8 percent and Asia and Africa with 9 percent. In fact, China led the growth in the company’s overseas business. Samsung Electronics posted 99.23 trillion won (US$86.81 billion) in global sales in the first half of this year, up 9.9 percent from a year earlier.
Since Chinese electronics manufacturers, including smartphone makers, cannot replace Samsung’s components, such as semiconductor chips and displays, with other products from other countries, Samsung Electronics has scarcely been affected by the THAAD retaliation.
In fact, Samsung China Investment Co. (SCIC), a Chinese electronics sale subsidiary of Samsung Electronics, posted 2.68 trillion won (US$2.35 billion) in sales and 53.8 billion won (US$47.1 billion) in net profits, down 49.4 percent and 39.2 percent, respectively, from the first half of last year. However, the sales and net profit of Shanghai Samsung Semiconductor (SSS), its Chinese semiconductor and display sale subsidiary, showed a whopping 33.3 percent and 42.9 percent to 11.92 trillion won (US$10.43 billion) and 107.8 billion won (US$94.34 million, respectively.
In particular, Samsung Electronics has expanded the portion of high value added products in the memory semiconductor business, including DRAM and NAND flash chips, in China. The company has supplied small and mid-size organic light-emitting diode (OLED) display panels to Chinese smartphone manufacturers, including Huawei, Oppo and Vivo, from last year, leading to the performance growth.