According to Korean publication TheElec, Roh made the first trip stateside in March and another in July. He was reportedly accompanied by a company vice president responsible for component purchases during his second trip to the US. They met an unnamed “global application processor maker,” possibly Qualcomm, to ask for more smartphone chipsets. However, they were “outright refused” by the said company. Perhaps the company was in no position to increase its overall supply, let alone supply more to Samsung. This shows the gravity of the situation. But Samsung’s desperation means the said company vice president responsible for component purchases stayed in the US for about three months to try and procure more chips. They eventually succeeded in securing some volume, the report claims. TM Roh, meanwhile, had returned to South Korea in July. He met a senior vice president who is the head of component purchases and reportedly “harshly admonished” them.
Samsung is losing its power in the industry as it desperately wants more chips
Since there aren’t many chip manufacturing companies out there, the ongoing chip shortage issue is here to stay for some time. In the meantime, the report suggests that Samsung is losing its power in the industry and the company itself is to blame for it. Since TM Roh took over as the head of the mobile business, the Korean behemoth has undergone major strategic changes. One of those is outsourcing the entire production of some budget smartphones. Samsung has tapped multiple Chinese ODMs (original design manufacturers) to produce devices like the Galaxy A6s in 2018, Galaxy A01 in 2019, and the Galaxy M02 and Galaxy A02 this year. ODM devices currently account for about 20 percent of the company’s overall smartphone volume. Since ODMs are responsible for the entire production of the devices, they also procure components on their own. Meaning Samsung is now sourcing lesser components from its suppliers than before. As a result, it is losing preference in the supply chain as the more important customers usually get the first batch of supply, the report suggests. TM Roh’s failure to guarantee more chips for the company is an indication of its weakened buying power. Of course, much of this is down to the fact that there’s a serious gap between demand and supply. And this means Samsung will have to manage its stock wisely. It has already canceled the Galaxy Note series for this year (or forever?) and is seemingly all set to cancel the Galaxy S21 FE as well. The company is instead using the resources and components in the Galaxy Z Fold 3 and Flip 3 foldables. However, these two devices will likely sell seven million units combined at most, which isn’t much for someone like Samsung. The effect is that the Korean firm is now expected to ship 260-270 million units of smartphones this year. That’s down from 290-300 million units previously estimated. Coronavirus outbreak in Vietnam, which caused some of its factories to temporarily shut down earlier this year, has also affected Samsung’s business. Time will tell how the company copes with these adversaries.
