Samsung to face limited impact of Hon Hai revolt
By Kim Tae-gyu
Samsung Electronics is bracing for a limited impact from the revolt of Hon Hai Precision Industry, which decided this week not to provide it with LCD panels for televisions, observers said Sunday.
Headed by outspoken Chairman Terry Gou, who iterated his intention to defeat Samsung, the Taiwanese group’s recently acquired Japanese unit Sharp made the surprise decision.
“Sharp is not the primary supplier of LCD panels to Samsung. As its proportion is less than 10 percent, the maneuver is not likely to make a big impact,” said an industry source who asked not to be named.
“Samsung has already allegedly started finding alternative sources other than Sharp. Because there are many competitors of Sharp in Korea and China, there would not be big problems.”
As a sister firm of Samsung Electronics, Samsung SDI churns out LCD panels en masse and its local rival LG Display is also one of the top-tier players in the industry.
The two companies carve out around one-fifth of the world market, respectively, to put Korea as a runaway leader in LCD panel production ahead of distant followers Taiwan, China and Japan.
Samsung reportedly sought help from LG Display but the anonymous source, who is familiar with this issue, countered that LG is not a priority negotiation partner for Samsung.
“There are many different analyses on Hon Hai’s unexpected maneuver. Some say Hon Hai is trying to nudge past Samsung and LG in the LCD panel rivalry,” he said.
“Some say Hon Hai is attempting to come up with its own TV brands instead of just providing components for panels. But none of the guesses are backed by any substantive facts.”
Chairman Gou has been notorious for his sense of rivalry against Korea and Samsung Electronics -- he made no secrecy of it, overtly vowing to beat Samsung.
Hon Hai competes with Samsung not only in the TV business but also in the smartphone industry: The former’s affiliate Foxconn is responsible for assembling most iPhone gadgets, the nemesis of Samsung’s Galaxy phones.
Hon Hai’s deliberate dropping of Samsung as a customer came at a time when the group is experiencing two troubles with regard to the iPhones. Sales of the Apple devices substantially decreased of late and incoming U.S. President Donald Trump presses Apple to make iPhones on American soil.
Apple might have to more diversify its iPhone production, and Foxconn might have to expand their U.S. facilities. Either option is likely to weigh on cost-sensitive Foxconn.
When contacted, Samsung Electronics refused to comment. So did representatives at LG Display.
When Hon Hai took over Sharp early 2016, the Korean tech giant responded that the mergers would not affect the industry landscape that much. Sharp has supplied around 5 million panels annually to Samsung, the world’s top TV maker.