As a representative company in South Korea, Samsung Electronics issued a bold statement in 2019 to become the system semiconductor industry champion in 2030. Coincidentally, in the downturn of the mobile phone market, Samsung Electronics has even more ambitious to launch the folding phone Galaxy Fold to stimulate the market.
What about reality? Taking a detailed inventory of all things in 2019, Samsung Electronics' dream-seeking path seems to be strong, weak, and weak, not only can't keep up with the gap between TSMC's foundry career, and the mobile phone market's championship throne has also been attacked by Huawei.
Foundry business is crowded out by customers, and the gap with TSMC may be even greater
While Samsung Electronics is sprinting into the field of system semiconductors, it may be necessary to take good care of the foundry business. The market survey agency TrendForce predicts that in the global semiconductor foundry market, Samsung Electronics ’market share estimate for the fourth quarter of 2019 is 17.8%, compared with the market share for the first three quarters (19.1%, 18%, 18.5%). ), The fourth quarter fear set a record low this year.
In comparison, the market share of TSMC, the No. 1 foundry, is expected to increase from 50.5% to 52.7%. If the forecast comes true, Samsung Electronics will reduce by 0.7 percentage points, and TSMC will increase by 2.2 percentage points. The gap between the two companies will increase as 34.9 percentage points.
In fact, Samsung Electronics introduced a 7-nanometer EUV process in 2019, and notified customers of the "foundry plan" earlier than TSMC. In terms of technology and schedule, it was no worse than TSMC, but Qualcomm finally decided to commission TSMC's flagship chip Snapdragon 865 Letting Samsung Electronics manufacture Snapdragon 765 and 765G chips one order lower, and the Apple iPhone also handed over orders for the flagship application processor (AP) "A13" to TSMC, which undoubtedly hurt Samsung's pride.
Korean media "Korea Economy" analysis, global IT companies are pinning Samsung Electronics. Because Samsung Electronics operates both the semiconductor design and foundry businesses, in general, when the AP manufactures APs, the company that owns the semiconductor design assets will hand over the design assets to the foundry company.
However, Qualcomm, Apple, Huawei and other major manufacturers compete with Samsung Electronics in other fields. In this regard, it is naturally impossible to entrust design assets to Samsung Electronics. Although Samsung Electronics independently avoided the system semiconductor business from the foundry department in 2017 to avoid suspicion, it is widely believed that Samsung Electronics did not establish the foundry business as an independent legal person, and I am afraid that it still won orders from large customers.
The road to foldable phones is bumpy, future market trends remain to be seen
On the other hand, at the World Mobile Communications Conference (MWC) held in February 2019, Samsung Electronics first publicly folded the mobile phone and planned to be listed on the U.S. market on April 26 of the same year, but the screen defect dispute broke out during the local media test. Samsung Electronics has no choice but to fully recycle the product and postpone its launch date.
Originally Samsung Electronics thought that it could solve the product problem in a few weeks, and finally spent more than 3 months to modify the design of the mobile phone, and re-launched the Galaxy Fold at the end of September of the same year. Folding the mobile phone to see the cloud, the new form of mobile phones has attracted attention from all walks of life, and there have been news of pre-sold out in various places, which has greatly boosted Samsung Electronics ’confidence. Countries launch Galaxy Fold.
However, the business opportunity potential of folding machines remains to be seen. Currently, Galaxy Fold has sold about 500,000 units worldwide. According to the latest data from the market research organization Strategy Analytics (hereinafter referred to as SA), Samsung ’s shipments in 2019 are about 323 million units. In contrast, the market influence of the machine is very small.
In addition, while Samsung Electronics pioneered the foldable mobile phone market, the global mobile phone market's championship position in 2019 is at stake. Huawei is biting Samsung. Not only did Samsung quickly launch the foldable phone MateX after Samsung, coupled with Sino-US trade disputes, Huawei has turned to the domestic demand market, and shipments will continue to increase in 2019. SA data also pointed out that Huawei's shipments in 2019 were 251 million units, and its market share gap with Samsung was inversely smaller than the previous year (5.9 percentage points). The market share gap between the two companies narrowed to 3.6 percentage points.
Overall operating performance is not as good as last year
In addition to Samsung ’s market position development, Samsung Electronics ’operating performance in the first three quarters of 2019 was not as good as the same period of the previous year. In the third quarter, its revenue was 62 trillion won, which was 5.3% lower than the same period of the previous year. The profit was 7.78 trillion won, a 55.7% decrease from the same period last year.
From the perspective of various departments, although the operating performance of the smartphone division in the first and second quarters was not as good as the same period of the previous year, the third quarter of 2019 benefited from new products such as the Galaxy Note10 series and Galaxy Fold, and the profit reached approximately 2 trillion won , About 30% higher than the previous quarter (1.56 trillion won).
However, the semiconductor business is not so lucky. Since the end of the golden period of memory semiconductors at the end of 2018, memory contract prices in the first quarter of 2019 have fallen by as much as 30%. This is the highest quarter of DRAM prices in a single quarter since 2011, and it has also affected Samsung Electronics. The profit of the semiconductor business in the first quarter of 2019 was 4.12 trillion won, which was 7.4% lower than the same period in 2018.
Not only that, affected by external factors such as the China-US trade war, Japan's export restrictions on South Korea, not only disrupted the chip supply chain, Samsung Electronics' raw material sources also almost died out, coupled with weak demand for memory semiconductors, which led to continued decline in prices. The third quarter of 2019 Samsung Electronics' semiconductor business profit was 3.05 trillion won, an annual decrease of 77.6%,
It is worth noting that although Samsung Electronics' operating performance in 2019 was not as good as 2018, it was higher than market expectations. It is expected that Samsung is leaving the trough. Although the fourth quarter revenue may be flat due to the impact of the off-season, it is expected to fully recover in 2020. Samsung, which is suffering from the enemy, is expected to show its strength again.