Samsung’s cell phone business is
on the decline. Though Samsung has continued to overshadow Apple since 2011 in
terms of sales volumes, this Samsung business actually lost market share down
to 24% in 2015 compared to 31% the previous year. Profits are down 35% Y-o-Y as
well. One would have assumed that Samsung would rejig its mobile phone business;
however something else altogether has been announced.
This week Samsung announced that
it is investing $14 Billion in setting up a Samsung Silicon Valley! This new
structure is going to be as large as 400
soccer fields, located at Pyeongtaek, Korea.
Layer this with the other key trend
in this space – Apple and Samsung’s massive growing collaboration. Samsung will
now manufacture chips for Apple’s iPhones as well as displays for other Apple
products. Samsung is also going to move away from Qualcomm for its own phones
and will use its Exynos chip for the S6 series and beyond.
This creates the following impact
points in the Semiconductor and Consumer Electronics industry –
- Samsung
will focus on grabbing Intel and Qualcomm’s market share much more aggressively
than it will Apple’s
- Samsung’s
Pyeongtaek facility will focus on DRAMs, which will threaten memory semi
companies that have Apple among their top 3 clients (ex: Micron Technology, SanDisk,
SK Hynix, etc.)
- Qualcomm will feel the heat as Samsung reverts to its own Exynos Chips
Another focus of this facility,
the second largest in the world after Intel’s, will be IoT chips. Apple can now
further collaborate with Samsung to smoothly introduce fresh products into the
IoT arena. It will be interesting to
watch this space as Samsung begins Pyeongtaek operations in 2017.
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