 |
| Samsung Electronics' Galaxy M smartphone / Captured from Samsung Electronics India webpage |
By Baek Byung-yeul
Samsung Electronics has signed a contract with BOE to use smartphone displays made by the Chinese manufacturer as part of its effort to reduce production cost and consequently retain its leading position as the world's top smartphone maker, according to industry sources, Monday.
Under the contract, the sources said, Samsung is scheduled to adopt OLED panels from Chinese display maker BOE for its new budget Galaxy M smartphones, which will be released in the second half of this year.
This is the first time for BOE to supply its flexible OLED panels to Samsung, though the Chinese maker previously supplied its LCDs. OLEDs are considered more advanced compared to LCDs as they are much brighter and have a faster response time.
The deal took place as BOE has been desperate to find new customers while Huawei, one of the biggest clients of the display maker, has decreased smartphone production after being hit by the U.S. government's sanctions banning the company's supply of components made with U.S. equipment, software and designs.
Samsung has long been procuring its flexible OLEDs for smartphones from its display-making affiliate Samsung Display. But when it comes to producing the less-pricey Galaxy M series devices, which are designed to help Samsung retain its smartphone sales volume, the company's decision to use cheaper BOE panels appears to be a rational move, said industry officials.
At a time when the smartphone market has entered a matured stage, Samsung has been struggling with sustaining momentum in the handset business. According to data by market researcher Strategy Analytics, the company could retain its status as the world's largest smartphone maker by sales volume with a 19.5 percent market share in 2020, but this was the first time for the phone maker's share to drop below 20 percent since 2011.
The group-wide cost-cutting effort is in line with Samsung's mobile chief Roh Tae-moon's effort to find a breakthrough in the saturated smartphone market. Roh, who was named CEO of the company's smartphone division in January 2020, has been increasing smartphone production outsourcing to better compete with Chinese rivals that have launched quality low-priced products.
Thanks to Roh's efforts, the operating profit of Samsung's smartphone business in 2020 was at 11.47 trillion won ($10.15 billion), up 23.7 percent from 2019 when it was at 9.27 trillion won. The 2020 performance was the second-highest one during the past five years, following 2017 when it was at 11.83 trillion won.
Regarding the contract, a Samsung Electronics official declined to comment, saying, "The company doesn't reveal where it secures components for its smartphones."
A Samsung Display official also refused to answer beyond saying, "We don't answer questions related to our client companies."
