Due to lackluster Galaxy S series sales
Suppliers to Samsung’s smartphone business saw their operating income slightly improve in the second quarter of 2021 from a year ago. They companies had recorded poor earnings a year ago due to the pandemic.
However, compared to two years ago, their combined operating income dipped by over 70%, while sales were down over 10% over the same time period.
This was from a slowdown in sales of the Galaxy S series and Samsung’s production problems.
TheElec collected the earnings data of 20 major suppliers to Samsung’s smartphone business, including camera module makers Partron and Mcnex.
Combined, they recorded 2.2 trillion won in sales and 45.5 billion won in operating income. The operating margin rate for the combined figure was only 2.1%.
Two years ago, they combined posted 2.53 trillion won in sales and 162.4 billion won in operating income __ their operating margin rate for the combined figure standing at 6.4%.
The combined sales and operating income during the second quarter of 2021 of the 20 suppliers were down 13.1% and 72%, respectively, from two years ago.
Last year in the second quarter, the pandemic froze consumer purchases of products, Samsung miscalculated demand for the Galaxy S20 series and its suppliers in China faced production problems from the pandemic.
In this year’s second quarter, Samsung faced less problems but there was the shutdown of its chip factory in Austin and production issues at its smartphone factory at Vietnam due to quarantine measures there.
In 2019, the Galaxy S10 series is thought to have hit 36 million in shipment. It was a return to form for the tech giant as the Galaxy S9 series of the previous year was though to have hit 32 million in shipment.
This year, the Galaxy S21 series was launched earlier than before and earnings for suppliers were reflected earlier on their fourth quarter of 2020 and first quarter results.
In the second quarter, due to the global ship shortage, Samsung adjusted its production volume for the Galaxy S21 series and ordered less components than expected.
For camera modules, Partron in the second quarter became the biggest supplier of camera modules to Samsung again. In the previous year it was Mcnex, which recorded an operating loss of 700 million won in the latest quarter. Namuga posted 103 billion won in sales and 3.8 billion won in operating income, beating Cammsys.
The five camera module makers combined recorded sales of 880.8 billion won, down 2.5% from the previous year and down 32.1% from two years ago.
Samsung has been assembling the camera module more on its own to cut camera module unit prices of its suppliers.
For board makers, Korea Circuit saw operating income increase 20.8% year-on-year while DAP returned to profitability from a year ago. The pair has benefited slightly from Samsung Electro-Mechanics and Isu Exboard’s exit of their smartphone board businesses.
For the second half of the year, suppliers that rely on Samsung aren’t expected to see substantial growth as the tech giant is aiming to ship up to only 7 million units of the Galaxy Z Fold 3 and Galaxy Z Flip 3 foldable phones.
Suppliers that rely on Apple and Chinese smartphone makers are expected to fare better in the second half. Cupertino is expected launch a new iPhone later this year.