South Korean component suppliers to Samsung’s smartphone business recorded lackluster performances in the first quarter 2021.
Sales from the recently launched Galaxy S21 series has already been reflected on their fourth quarter earnings due the models' earlier than usual launch.
Smartphone companies such as Samsung are also facing difficulty procuring core chips needed in their products due to the global chip shortage, which is delaying products launches that will postpone supplies by suppliers of other components as well.
The combined sales of nine major parts suppliers (that has over 100 billion won in quarterly sales) for Samsung's smartphones in the first quarter was 1.658 trillion won, a drop of 5.9% year-on-year.
Their combined operating income was only 23.5 billion won, which was still a drop of 21.4% over the same time period.
Camera module supplier Partron recorded 332.7 billion won in sales and 15.7 billion won in operating income, an increase of 25% and 32.7%, respectively, from a year prior. It was the only company among suppliers that recorded growth.
Partron failed to make the supplier list for the Galaxy S20 series last year but secured high volumes for Galaxy A series, which helped the turnaround.
Fellow camera module supplier Mcnex recorded 255.1 billion won in sales and 19.6 billion won in operating income, a dip of 30.9% and 77.3%, respectively, from a year prior.
Its supplier for Galaxy S21 had already been recorded on the fourth quarter and the company won less orders for the Galaxy A series compared to Partron.
Namuga, which also supplies camera modules, recorded 168.1 billion won in sales and 7.8 billion won in operating income. The firm saw sales increase 30% year-on-year thanks to it supply of rear cameras for the Galaxy S21 series.
Cammsys, also a camera module supplier, saw sales of 153.6 billion won, a dip of 49.1% from a year prior. It also recorded an operating loss of 3.6 billion won.
Lens module firm Sekonix succeeded in recording a profit of 4.4 billion won. The company recorded lackluster earnings in 2020 due to its Chinese operation shutting down from the pandemic. Sekonix is also suffering from Chinese lens makers such as Largan Precision and Sunny Optical taking a bigger share in Samsung’s lens supply chain. Sekonix is attempting to reduce its reliance on smartphones and is expanding to automobiles. It is supply camera modules to Hyundai Mobis.
High density interconnection board suppliers Korea Circuit and DAP both posted lackluster earnings in the first quarter. Korea Circuit posted 138.8 billion won in sales and 6.8 billion won in operating income, a drop of 3.4% and 21.3%, respectively, from a year ago. The firm makes boards for chips and smartphones, but the latter accounts for more in its total sales. DAP posted 66.6 billion won in sales, a drop of 13.8% year-on-year. The firm posted 1.1 billion won in operating loss. DAP also makes boards for chips and smartphones, but latter accounts for the majority of its sales.
Flexible printed circuit board firms BH and Interflex also recorded poor earnings. BH marked 138.7 billion won in sales, a drop of 6.2% year-on-year. It recorded a steep operating loss of 15 billion won. The firm saw less volume for its rigid flexible printed circuit boards from Apple than expected. Interflex recorded 81.2 billion won in sales, a surge of 38.2% year-on-year. But it recorded a 4.1 billion won operating loss. Sales increase came from the digitizers for Galaxy S21 Ultra and Samsung’s notebooks.
PI Advanced Materials recorded 77.6 billion won in sales and 20.6 billion won in operating income, a jump of 25.9% and 40.6%, respectively, year-on-year. The firm supplied more modified polyimide films used in 5G smartphones. It also supplied polyimide films for chip on films used in the Galaxy A series.
Innox Advanced materials saw sales of 96 billion won and operating income of 13.6 billion won, a jump of 34.9% and 156.6%, respectively, year-on-year. The firm’s encapsulation supply to LG Display for large OLED panels contributed to the growth. LG Display shipped 1.6 million large OLED panels in the first quarter.
Jawha Electronics’ exit from the camera module business helped its first quarter earnings. Increased supply of optical image stabilization also helped. It recorded 94.3 billion won in sales, a jump of 47.5 year-on-year. It also turned a profit of 5.5 billion won in operating income.
Samsung’s smartphone parts suppliers are expecting to turnaround in the second half of the year at he earliest. Samsung is expected to ship less smartphones in the second quarter due to the shortage of display driver ICs.