Samsung Electronics plans to expand the volume of camera modules for smartphones that it assembles on its own next year, TheElec has learned.
The move is aimed at lowering unit prices from camera module suppliers and will intensify competition between them.
The volume will increase “significantly” next year compared to 2020, people familiar with the matter said.
For 2020, for triple to quad cameras, for most of the volume, suppliers produced the camera modules and assembled them themselves before delivering them to Samsung.
But for this year, Samsung will take over much of the final assembly process. The South Korean tech giant will no longer need to pay its suppliers fees for assembly and will increase its own sales.
Camera spec competition in mid-tier smartphones is intensifying. This has resulted in improve performances for camera module companies but lowered profitability for smartphone manufacturers.
Mcnex, Partron and Powerlogics all posted over 1 trillion won in sales last year. Samsung, meanwhile, is continuing to see lower profits from its IT&Mobile business, which makes smartphones. The business posted 11.8 trillion won in operating profit in 2017, but this dropped to 10.2 trillion won in 2018 and 9.3 trillion won in 2019.
The camera module industry in South Korea are showing mixed reactions to the move.
Camera module companies that relied less on the back cameras __ such as Namuga and CoAsia __ are seeing this as an opportunity. The two companies focused on camera modules for the front camera. They will see more orders for back cameras as well as now that Samsung will be assembling them on its own. Back camera modules have a higher unit price.
But for Mcnex, which supplied and assembled multi-camera modules, the move is bad news. Samsung already increased the competition between suppliers when it came to the Galaxy S20 series launched earlier this year. Samsung Electro-Mechanics has said in July that it plans to enter the camera module market for mid-tier smartphones.
People familiar with the matter said the increase competition will hurt camera module companies’ bottom line and there maybe the issue of defects as Samsung will assemble modules on its own. Low price orders can lead to camera module makers delivering lackluster goods that can lead to defects.
Samsung is continuing to diversify its suppliers for camera modules to lower price. For Galaxy S20 FE, which the company plans to ship 5 million, it has Samsung Electro-Mechanics, Mcnex, Partron, Cammsys, Powerlogics, Namuga and Sunny Optical of China as its suppliers. This will allow Samsung to lower the unit price.