Review deadline pushed from July to August
Samsung Electronics is extending its management review of its mobile business this month, TheElec has learned.
The review was to last until end of July but this was extended to end of August sources said. Depending on how the review goes, Samsung could commence an audit of its mobile business, they said.
Samsung’s Business Support Task Force had started their review during the second quarter.
Samsung commences periodic reviews and special reviews of its many business units.
Periodic reviews are done every four to five years to evaluate the status of business units implement measures to increase their efficiency.
Special reviews are done without warning when the top leadership considers there is a problem with a particular business unit.
The latest review of Samsung Mobile was a special review, the sources said.
The review was being done due to lackluster earnings of Samsung Mobile and supply chain management problems it is facing.
Samsung’s latest phone Galaxy S21 series is expected to have sold only 13.5 million units during the first half of the year.
Galaxy S series of old sold over 30 million units, while Galaxy S20 series sold around mid-20 million units.
Samsung is highly likely to miss its sales target for Galaxy S21.
The company’s lackluster performance in 5G smartphones was also a reason for the review, the sources said.
Samsung was one of the first companies to launch 5G smartphones in 2019 but has fallen behind in market share to rivals in recent years.
According to Strategy Analytics, the South Korean tech giant ranked fourth in global 5G smartphone market share with 12.5%. Apple ranked first with 29.8%, followed by Oppo’s 15.8% and Vivo’s 14.3%.
Coupled with lower-than-expected smartphone sales, supply chain problems Samsung Mobile is facing was also a reason for the review, the sources said.
The company’s relationship with MediaTek has recently been rocky. The Taiwanese firm had supplied application processors for Samsung’s Galaxy A series and other mid-tier phones. The latest Galaxy A32 launched earlier this year also used MediaTek’s chip. However, MediaTek has recently told Samsung that it can not meet all the orders, the sources said.
This was not only because of the recent chip shortage but because of Samsung’s weakened position in the smartphone market, they said.
The review could be done in light of Samsung Electronics vice chairman Lee Jae-yong’s potential parole release later this month. The Samsung leader could be reviewing all core business units before his release to prepare to act accordingly when he is released, the sources said.
A Samsung spokesperson declined to comment on the matter. However, they added that the individual business units could review their own business practices without the top management conducting a review.