[DigiTimes] Samsung putting capex focus on OLED could lose major foundry client

[Arachnotronic]

Qualcomm, a major foundry client of Samsung, has become aware of the risks associated with Samsung putting its capex focus on the OLED panel market, and is considering coming back to TSMC earlier than planned, according to industry sources.

http://www.digitimes.com/news/a20160912PD201.html

Makes sense to me, Samsung seems to be falling behind TSMC in terms of leading edge foundry. Why try to compete against TSMC at its own game when it can invest more in OLED panels, something that Samsung actually does better than anyone else (at least in the mobile market)?

 

[witeken]

I didn't even know Qualcomm uses Samsung as foundry.

 

[Arachnotronic]

I didn't even know Qualcomm uses Samsung as foundry.

Qualcomm ditched TSMC at the 14/16nm generation, likely in an attempt to win spots in the Note7/S7 series.

 

[krumme]

Samsung have wasted money on their foundry business for years.

I think its wrong they went there in the first place.

They have always been behind tsmc that had a far better utilization of their fabs.

Samsung needs to decide what to do long term. As gf does.

When samsung and mubadala is tired of wasting ressources doing the same there needs to be a consolidation.

Its interesting it havnt happened already. Perhaps mubadala politics and the same or some old moving make all yourself culture at Samsung?

 

[dark zero]

Remember something... If Samsung and GloFo are out, IBM, Oracle, AMD are going out too. And that would hurt TSMC if they are not prepared to the incomming demand. Intel would love it.

 

[nurturedhate]

The OLED point seems to go against the stories of Samsung going with quantum dot tech over OLED for displays.

 

[Arachnotronic]

The OLED point seems to go against the stories of Samsung going with quantum dot tech over OLED for displays.

They are all in on OLEDs in mobile.

 

[Roland00Address]

Samsung owns 95% of the mobile OLED market shipping 86.7 million units q1 2016, yet this market is only 91.3 million units per quarter

Q1 2016
http://www.ibtimes.co.uk/samsung-accounts-95-smartphone-oled-display-shipments-q1-2016-1565142

If we get OLED in the 2017 iphone, that means another 40 to 75 million mobile OLED screens per quarter (iphone sales vary a lot per quarter, with q1 usually having the best total units sold)

 

[NTMBK]

Samsung have wasted money on their foundry business for years.

I think its wrong they went there in the first place.

They have always been behind tsmc that had a far better utilization of their fabs.

Samsung needs to decide what to do long term. As gf does.

When samsung and mubadala is tired of wasting ressources doing the same there needs to be a consolidation.

Its interesting it havnt happened already. Perhaps mubadala politics and the same or some old moving make all yourself culture at Samsung?

Samsung have managed to repeatedly win the business of Apple, the biggest and most lucrative contract in the market- something that the likes of Intel have never achieved. I wouldn't put them in the same class as also-rans like GlobalFoundries.

 

[Arachnotronic]

Samsung have managed to repeatedly win the business of Apple, the biggest and most lucrative contract in the market- something that the likes of Intel have never achieved. I wouldn't put them in the same class as also-rans like GlobalFoundries.

Even GloFo has had more 3rd party foundry success than Intel, lol

 

[itsmydamnation]

Even GloFo has had more 3rd party foundry success than Intel, lol

My understanding ( drilling people like Aaron spink) for Intel is the one and only issue is the complete lack of 3rd party IP. Thats got to be a very hard thing to change and one area Tsmc is just dominate. So in that regard i think intel get a good effort award

 

[Mopetar]

Samsung's foundry business is one of the reasons that they're essentially the only profitable Android manufacturer. In a commoditized market, the most successful player will the be one that can lower their costs the most. The other companies have a price floor that they can't go below or they lose even more money, but Samsung can maintain a similar price level while profiting from lower component costs because they're not paying third party markup prices. They also have the opportunity to differentiate themselves better (Exynos SoC, Samsung displays) because they can make their own components that no other handset maker has access to.

 

[Andrei.]

Samsung's foundry business is one of the reasons that they're essentially the only profitable Android manufacturer. In a commoditized market, the most successful player will the be one that can lower their costs the most. The other companies have a price floor that they can't go below or they lose even more money, but Samsung can maintain a similar price level while profiting from lower component costs because they're not paying third party markup prices. They also have the opportunity to differentiate themselves better (Exynos SoC, Samsung displays) because they can make their own components that no other handset maker has access to.

That's now how Samsung works. The mobile division buys components from LSI and Samsung Display at market price with no other discount other than the usual volume contract advantages. If Qualcomm or anybody else offers better bang for buck they will go with that player instead of in-house, which is exactly what happened in the S4 and S5 generations. Samsung is not vertical in the common sense.

 

[Arachnotronic]

That's now how Samsung works. The mobile division buys components from LSI and Samsung Display at market price with no other discount other than the usual volume contract advantages. If Qualcomm or anybody else offers better bang for buck they will go with that player instead of in-house, which is exactly what happened in the S4 and S5 generations. Samsung is not vertical in the common sense.

Should point out that previously, Samsung had the luxury of a huge anchor customer in the form of Apple. Apple's gone with the A10 and will remain gone at the A11, and probably A12/A13, so Samsung needs to fill its factories with something. That's why they are more aggressively using their own chips and got Qualcomm on board for foundry.

I have heard that there is a policy at Samsung in place now, essentially no TSMC-built APs in flagship Samsung smartphones from here on out.

 

[krumme]

Samsung's foundry business is one of the reasons that they're essentially the only profitable Android manufacturer. In a commoditized market, the most successful player will the be one that can lower their costs the most. The other companies have a price floor that they can't go below or they lose even more money, but Samsung can maintain a similar price level while profiting from lower component costs because they're not paying third party markup prices. They also have the opportunity to differentiate themselves better (Exynos SoC, Samsung displays) because they can make their own components that no other handset maker has access to.

Ikea dont produce eg the furniture themselves even knowing the producers have a markup. For reasons we know.

This markup giving disadvantage is nonsense but keep beeing repeated all over everywhere. There is markup internally to. Its the same. Most companies like to make a profit.

 

[krumme]

That's now how Samsung works. The mobile division buys components from LSI and Samsung Display at market price with no other discount other than the usual volume contract advantages. If Qualcomm or anybody else offers better bang for buck they will go with that player instead of in-house, which is exactly what happened in the S4 and S5 generations. Samsung is not vertical in the common sense.

Thats how they present it yes. But i have experience in practice for other huge corperations where when going to ground level where the offers is made and negotiated the reality is ofcource a good deal off. For the people buying the stuff they are under pressure. And there are good reasoms they are. Both buyers and sellers know what other perspectives is in place. They can see because they have the technical knowledge while top management like to paint a different picture and get the reality into small square boxes where it seldom fits perfectly.

 

[fleshconsumed]

Don't care about their fab, but I really hope we'll finally see some OLED TVs from Samsung to put pressure on LG and maybe even OLED monitors. One can only dream...

 

[Arachnotronic]

Don't care about their fab, but I really hope we'll finally see some OLED TVs from Samsung to put pressure on LG and maybe even OLED monitors. One can only dream...

Samsung has said that it's not going the OLED TV route, AFAIK.

OT: just realized your handle is a reference to the name of the fourth Doom Episode, Thy Flesh Consumed

 

[fleshconsumed]

Samsung has said that it's not going the OLED TV route, AFAIK.

OT: just realized your handle is a reference to the name of the fourth Doom Episode, Thy Flesh Consumed

That may be true, but Samsung already owns entire smartphone OLED market, I'd like to think that the only reason to put more focus on OLEDs is to branch out into TVs and monitors.

And yes, it is, I really need to petition to change my name

 

[Andrei.]

I have heard that there is a policy at Samsung in place now, essentially no TSMC-built APs in flagship Samsung smartphones from here on out.

That would be a goal, not a policy. If LSI screws up a future Exynos and Qualcomm on TSMC has something better then Mobile will go with Qualcomm.

 

[Arachnotronic]

That may be true, but Samsung already owns entire smartphone OLED market, I'd like to think that the only reason to put more focus on OLEDs is to branch out into TVs and monitors.

And yes, it is, I really need to petition to change my name

There are a lot of LCDs that ship into phones, way more than OLEDs today. That opportunity is going to get much, much larger with Apple on board, and frankly it is a far more lucrative opportunity than playing second fiddle to TSMC in foundry land.

(You should change your handle to something involving Cacodemons, obviously )

 

[Mopetar]

That's now how Samsung works. The mobile division buys components from LSI and Samsung Display at market price with no other discount other than the usual volume contract advantages. If Qualcomm or anybody else offers better bang for buck they will go with that player instead of in-house, which is exactly what happened in the S4 and S5 generations. Samsung is not vertical in the common sense.

It doesn't really matter how it works internally as they end up paying themselves instead of someone else. Also, Samsung's divisions only offers certain components to Samsung's other divisions. Their mobile division doesn't compete with anyone else for supply of Exynos chips or Samsung OLED displays. That the foundry will sell excess capacity to third parties is just good business on Samsung's part if they don't consume their entire production by themselves and if someone like Apple wanted to pay triple for all wafers, Samsung's mobile division could just use chips that come from TSMC.