Increasing Reliance on Chinese and Taiwanese Vendors
Samsung Electronics has recently been increasing the use of core smartphone parts from Chinese and Taiwanese companies.
“Samsung Electronics will procure 3.5 million and 3 million OLED panels for Galaxy smartphones from BOE and CSOT, respectively, in 2022,” Yasuo Nakane, a researcher at Mizuho Securities in Japan, said at a display conference hosted by UBI Research, a market research firm.
Samsung Electronics has estimated its demand for OLED panels for Galaxy smartphones in 2022 at 155.5 million units, according to the Japanese researcher. Samsung Display will be responsible for 149 million units or 96 percent of the volume, with BOE and CSOT supplying 3.5 million and 3 million units, respectively.
Chinese display makers have made massive investments to overtake Korean companies in the OLED market. As a result, they could enter the supply chain of Samsung Electronics.
CSOT is currently supplying displays for the Galaxy M series that Samsung Electronics sells in India. On April 5 (local time), the Chinese display maker held a ceremony at its factory in India to mark the first shipment of OLED panels. Samsung Electronics has thus far never used OLED panels for smartphones from a foreign manufacturer. CSOT is a display subsidiary of TCL, a Chinese home appliance company.
BOE and CSOT reportedly participated in a display development process for the Samsung Electronics Galaxy A37 in 2021. The Galaxy A37 is the best-selling product among the Galaxy A budget smartphone series. Samsung Electronics considers OLED panels from BOE and CSOT as competitive in terms of price and technological prowess.
Earlier, BOE entered the OLED supply chain for the Apple iPhone. It is Apple’s third panel supplier after Samsung Display and LG Display. So far, the Chinese panel maker has supplied OLED panels for repairing parts and replacements, but its OLED panels are expected to go into new iPhones in the future.
Samsung Electronics is considering using MediaTek’s Dimensity application processor as the brain of the Galaxy S series. The chip is expected to power half of the Galaxy S22 FE smartphones and the Galaxy S23 to be sold in Asia.
Samsung has so far used MediaTek chips for mid- to low-priced smartphones or tablets. For the flagship Galaxy S series, it used APs from Qualcomm and Samsung’s LSI Business Division.
Recently, the global semiconductor supply chain is unstable, and it is more difficult to secure smartphone chips due to competition in microfabrication processes. Samsung Electronics appears to be moving to add MediaTek to the list of its vendors in an effort to stabilize its supply chain.
MediaTek, which had been seeking to expand the market with low- and mid-priced chips, has recently emerged as a rising star in the flagship chip market. In particular, as the Taiwanese chipmaker is known for its chips’ high price competitiveness compared to their performance, more Chinese smartphone manufacturers are adopting MediaTek chips. Samsung Electronics is also considering MediaTek chips to boost its competitiveness in the smartphone market.
MediaTek ranks second in the global mobile chip market with a 26.3 percent share after Qualcomm with a 37.7 percent share, according to Strategy Analytics (SA), a market research firm. Although low- and mid-priced chips make up 95 percent of MediaTek’s total shipments, interest is on the uptick among smartphone makers as the recently released high-performance chip Dimensity 9000 has received favorable reviews. This chip was made in a 4nm process at TSMC in Taiwan.