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Samsung warns of weakened demand for chips, displays in second half of 2011

post #1 of 34
Thread Starter 
Apple manufacturing partner Samsung has warned of weak growth on chip orders and a downturn on displays, in what could be construed as a evidence of Apple's alleged plans to transition component purchases away from the competitor with which it is currently engaged in a patent infringement suit.

Samsung executive Kwon Oh-hyun cautioned that the company's semiconductor and flat-panel display businesses, which provided 70 percent of Samsung's operating profit last year, are experiencing difficulties, The Wall Street Journal reports.

"In the past, the semiconductor market tended to be weaker in the first half and stronger in the second half, but for this year, it is likely to remain flat throughout the latter half," Kwon recently told Korean reporters. The executive, who has been serving as chief of the company's semiconductor business, is set to head up Samsung's newly combined component operations.

Though reports last week had suggested that the move was a financial decision to hide losses in Samsung's display unit among profits from its semiconductor business, Kwon's most recent comments suggest that the company's chipmaking operations may be faltering as well.

Samsung is expected to announced 4 trillion won ($3.76 billion) in earnings this quarter, down from a record second-quarter operating profit of 5.01 trillion won ($4.7 billion) last year. Analysts believe the company's flat-panel business will lose money for the second quarter in a row.

Though electronics sales usually rise in the second half of the year, the memory market appears to be oversupplied. Executives from Hynix Semiconductor, which competes with Samsung in producing memory chips, announced last month that second-quarter operating profit would likely miss forecasts.

Demand for LCDs has also dropped off, even as a number of LCD factories in China are scheduled to open. Recent reports from industry publication DigiTimes suggested large-size LCD and LED display manufacturers have reduced output in response to weakening demand and falling prices.

It remains unclear what effect Apple's share of orders will have on Samsung's outlook. The company is expected to place $7.8 billion worth of orders with Samsung this year.

Apple's suppliers have reportedly begun gearing up for production of next-generation versions of the iPhone and iPad, though it's possible that components for the devices have already been stockpiled for next quarter.

Meanwhile, Apple and Samsung are locked in a heated legal battle after the Cupertino, Calif., company sued the Korean electronics giant in April, alleging that Samsung had copied the look and feel of the iPhone and iPad. Last week, the iPhone maker filed for a preliminary injunction that would block for of Samsung's products while the case is being resolved.

Apple executives maintain that, in spite of the dispute, Samsung remains a valuable partner in supplying components for the devices. But, rumors have swirled that Apple is planning to move away from Samsung when it begins production of the so-called "A6" processor in 2012. Apple will reportedly turn to Taiwan Semiconductor Manufacturing Company for production of the chip.
post #2 of 34
The hilarious part about all of these reports and news stories is that they completely contradict each other.

One minute, we hear that Apple has a stranglehold on much of the display market and they've got everything locked down because they pay huge sums upfront, and Amazon might have a hard time getting enough displays for their upcoming tablet.

And then, the very next minute, we hear that Samsung is reporting a weakened demand for displays. So why doesn't Amazon or anybody else who is supposedly in desperate need of displays just get them from Samsung?

In a day or two, there will probably be a new report about how Apple has the whole market locked down again.
post #3 of 34
Oh what a shame. I might cry.
post #4 of 34
Quote:
Originally Posted by Apple ][ View Post

So why doesn't Amazon or anybody else who is supposedly in desperate need of displays just get them from Samsung?

Don't tell them. They will only go and make crappy products that nobody wants.
post #5 of 34
Samsung display demand weak... In other news, some other supplier of iPad size displays have picked up immensely!
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post #6 of 34
Is this about mobile device displays or television and desktop monitor displays?
post #7 of 34
Looks like somebody is trying to short that stock!!!!!!!!!!!!!!
post #8 of 34
Maybe the "weak growth on chip orders and a downturn on displays" refers to orders from Apple.
post #9 of 34
If I was a prudent production manager and recognized that my company had decided to enter into a death match fight with my largest client, I would be reducing my forecasts going forward too.

Samsung has put itself in a no win situation, its suing Apple (bigs balls here) putting in jeprodey many billions in supply contract sales going forward..... why would this be the case?

1). Loss of the ITC ruling on their four newest/hottest consumer products would be a earning disaster if they could not tap the US market......
2). Samsung realizes that they have a very weak case and in a straight up decision will lose and thus will be trying to work out an agreement will Apple to prevent a complete earning nightmare....
3). Samsung already knows Apple is moving to diversify its supply lines and in addition is already working with Taiwan Semi on the A6 chip (long lead times on development are certainly necessary).

Probably a good rule to follow is to not piss off Jobs.... once he sets a direction in solving a problem he is relentless in a solution..... Samsung is just reacting to the reality of having their balls cut off.

Having billions available on call makes no problem unsolvable, including building new factories, prepaying a supplier to gear up for new business or buying a patent portfolio when necessary.

Samsung as one the premier Android devise manufacturers is now dripping blood and without the Apple business/technology to copy/leverage for its own volume/profit advantage is demonstrating it sees big problems down the road.
post #10 of 34
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post #11 of 34
Quote:
Originally Posted by apple ][ View Post

the hilarious part about all of these reports and news stories is that they completely contradict each other.

One minute, we hear that apple has a stranglehold on much of the display market and they've got everything locked down because they pay huge sums upfront, and amazon might have a hard time getting enough displays for their upcoming tablet.

And then, the very next minute, we hear that samsung is reporting a weakened demand for displays. So why doesn't amazon or anybody else who is supposedly in desperate need of displays just get them from samsung?

In a day or two, there will probably be a new report about how apple has the whole market locked down again.


samsung makes all kinds of displays. Tv of different sizes, and various other sizes for mobile units. May be they have problems with ones amazon cannot use !
post #12 of 34
Time to get out of the stock market. Also time to buy a big new TV.
post #13 of 34
Samsung probably based their forecast on the assumption that non-iPad tablets (including their own) would pick up in 2011. As it's evidently not the case they have to review the forecast with a downside.
post #14 of 34
Quote:
Originally Posted by quinney View Post

Is this about mobile device displays or television and desktop monitor displays?

Likely both, plus more.

Their display component business probably covers everything from miniature displays for small handheld devices (e.g., something the size of an iPod nano) all the way to the largest displays. The final application wouldn't be relevant. It could be anything from a watch display or auto gauge all the way to industrial applications (e.g., medical equipment) to consumer-grade televisions.
post #15 of 34
Were Samsung not able to predict that ripping off Apple would result in lower sales to Apple?
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post #16 of 34
Quote:
Originally Posted by quinney View Post

Is this about mobile device displays or television and desktop monitor displays?

I think that orders and demand for Samsung televisions are down because most people already own flatscreens and because more people are turning to online entertainment instead of satellite and cable for example. Apple is going to destroy Samsung. I hope Samsung burns in hell
post #17 of 34
Quote:
Originally Posted by Apple ][ View Post

The hilarious part about all of these reports and news stories is that they completely contradict each other.

One minute, we hear that Apple has a stranglehold on much of the display market and they've got everything locked down because they pay huge sums upfront, and Amazon might have a hard time getting enough displays for their upcoming tablet.

And then, the very next minute, we hear that Samsung is reporting a weakened demand for displays. So why doesn't Amazon or anybody else who is supposedly in desperate need of displays just get them from Samsung?

In a day or two, there will probably be a new report about how Apple has the whole market locked down again.

The weak demand is a projection for upcoming and future quarters. Apple bought a very large block several quarters prior to their main release.

This warning will be seen as a means of Apple moving away from Samsung and probably towards LG.
post #18 of 34
Quote:
Originally Posted by roocka View Post

I think that orders and demand for Samsung televisions are down because most people already own flatscreens and because more people are turning to online entertainment instead of satellite and cable for example. Apple is going to destroy Samsung. I hope Samsung burns in hell

Most people don't already own Flat Panels.

In fact, the US is lucky to see 60% of US homes having even an HDTV let alone them all coming from Samsung.

CE survey says 65% in May 2010 but that's truly pushing it.

http://www.hdtvmagazine.com/news/201...tudy-finds.php
Quote:
CEA's study also shows that video products continue to be the top CE device consumers own, with HDTV ownership continuing to increase. Sixty-five percent of U.S. homes now own at least one HDTV, an increase of 13 percentage points from last year, making it the top industry growth driver of the past 12 months. Consumers also are buying HDTVs as secondary sets. The average household now owns 1.8 HDTVs, up from 1.5 in 2009. HDTVs are also the top product consumers say they want to purchase. Nearly one in four households (23 percent) plan to buy a new high-definition set in the coming 12 months.

My 24" LCD panels are HD compliant for my systems, but I don't own an HDTV. I'm not impressed until the next generation of panel tech shows up for the average consumer.

VIZIO is also the number one US HDTV provider.

There is plenty of room for HDTV growth in the US.

The embedded market is dominated by Apple and for Samsung to lose the Chip assembly and panel fab contracts with Apple would be a massive blow.
post #19 of 34
Quote:
Originally Posted by rtamesis View Post

Maybe the "weak growth on chip orders and a downturn on displays" refers to orders from Apple.

Quote:
Originally Posted by quinney View Post

Is this about mobile device displays or television and desktop monitor displays?

I think the main dropoff is in televisions due to a lot of people having made the transition to HDTVs. 3D was pushed heavily to drive growth but I think the flickering, expense and lack of content is still an issue.

As for desktop monitor displays, maybe there's some reduction in demand due to the ongoing shift to laptops.

For tablets and smartphones, I'm sure the demand is still very high.
post #20 of 34
Quote:
Originally Posted by mdriftmeyer View Post

Most people don't already own Flat Panels.

In fact, the US is lucky to see 60% of US homes having even an HDTV let alone them all coming from Samsung.

CE survey says 65% in May 2010 but that's truly pushing it.

http://www.hdtvmagazine.com/news/201...tudy-finds.php


My 24" LCD panels are HD compliant for my systems, but I don't own an HDTV. I'm not impressed until the next generation of panel tech shows up for the average consumer.

VIZIO is also the number one US HDTV provider.

There is plenty of room for HDTV growth in the US.

The embedded market is dominated by Apple and for Samsung to lose the Chip assembly and panel fab contracts with Apple would be a massive blow.

Okay that's interesting. One then has to wonder why Samsung is underperforming in displays... It is a reasonable product at a reasonable price. Globally their HDTVs and other flatscreens should not be experiencing critical business issues like this.
post #21 of 34
Samsung's view on LCDs here isn't a lone voice in the industry

http://www.displaysearch.com/cps/rde..._on_record.asp
post #22 of 34
Ironically, Samsung (and many other manufactures) don't make a good chunk of its own panels for its TVs. That is why I wouldn't buy a Samsung TV. Worst, for a particular model TV, Samsung might be getting panels from a variety of different sources. Usually the display model in the Store is a Samsung panel, but the one in the box probably is not. So, many people get home and are surprised to find a difference in quality. There are INternet forums complaining about this issue.

If you want a somewhat affordable TV from a manufacturer who actually makes the panels go with Sharp and perhaps Sony. I think the Sharp TVs are very Apple like.

Quote:
Originally Posted by Mister Snitch View Post

Time to get out of the stock market. Also time to buy a big new TV.
post #23 of 34
Whilst Apple have their cheque book out they should buy Samsung's semiconductor business for a special 'dont sue us so hard' price. That'd provide the end-to-end integration they're after with no supply dependencies or IP concerns.

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post #24 of 34
Quote:
Originally Posted by cloudgazer View Post

Samsung's view on LCDs here isn't a lone voice in the industry

http://www.displaysearch.com/cps/rde..._on_record.asp

Quote:
Originally Posted by TBell View Post

Ironically, Samsung (and many other manufactures) don't make a good chunk of its own panels for its TVs. That is why I wouldn't buy a Samsung TV. Worst, for a particular model TV, Samsung might be getting panels from a variety of different sources. Usually the display model in the Store is a Samsung panel, but the one in the box probably is not. So, many people get home and are surprised to find a difference in quality. There are INternet forums complaining about this issue.

If you want a somewhat affordable TV from a manufacturer who actually makes the panels go with Sharp and perhaps Sony. I think the Sharp TVs are very Apple like.

From cloudgazer's link:

Samsung was the #1 brand on a revenue basis in almost every region it operated, with the exception of China where domestic brands dominate, and Asia Pacific where LGE led. Samsung also rose to #1 in total worldwide plasma TV unit share, but still trailed Panasonic in total revenues. Samsung’s total flat panel TV revenue share was up slightly, to 22.2%, about the same share as a year ago. In the highly competitive North America market, Samsung continued to trail Vizio in total LCD units, but led in revenues due to a higher share of 40”+ sizes.

Samsung was the #1 3D TV global brand overall, accounting for all technologies, with 34% of revenues. Within the 3D LCD TV category, Sony had the top share with 33% of revenues, while Samsung led 3D plasma TV revenues at 45%.


Something is fishy. Why is the #1 display brand having to do something weird like bundling it up with the semiconductor business?
post #25 of 34
Quote:
Originally Posted by nvidia2008 View Post

Something is fishy. Why is the #1 display brand having to do something weird like bundling it up with the semiconductor business?

This is pure speculation but maybe Samsung feels that the management in the chip business is more prepared for the kind of cut throat competition and supply gluts from Chinese makers that is hitting the LCD market.

Samsung may be the kings of display panels right now, but they know how fast that kind of lead can be taken.
post #26 of 34
These companies keep having to learn the hard way, don't get on the bad side of Apple. You get these CEOs with Napoleonic complexes that have to prove they can piss farther, only to come back later with their tails between their legs admitting they were wrong.

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post #27 of 34
Quote:
Originally Posted by nvidia2008 View Post

From cloudgazer's link:

Samsung was the #1 brand on a revenue basis in almost every region it operated, with the exception of China where domestic brands dominate, and Asia Pacific where LGE led. Samsung also rose to #1 in total worldwide plasma TV unit share, but still trailed Panasonic in total revenues. Samsungs total flat panel TV revenue share was up slightly, to 22.2%, about the same share as a year ago. In the highly competitive North America market, Samsung continued to trail Vizio in total LCD units, but led in revenues due to a higher share of 40+ sizes.

Samsung was the #1 3D TV global brand overall, accounting for all technologies, with 34% of revenues. Within the 3D LCD TV category, Sony had the top share with 33% of revenues, while Samsung led 3D plasma TV revenues at 45%.


Something is fishy. Why is the #1 display brand having to do something weird like bundling it up with the semiconductor business?

I don't know about the bundling of the division with the Semi division, but the litany of exceptions in the quoted red text is rather contra-indicative of Samsung's position of the "#1 brand". WTH? They generate the most revenue everywhere, except for the gigantic markets of China and Asia-Pacific (Japan, Korea, etc). Sells the most plasma TVs but doesn't make the most money and plasma TVs are the minority in the big flat panel TV category. Flat panel TV revenue share is flat, a market a I presume isn't growing that fast. It's sounds like there is a lot of competition in the TV market.

The TV market is a commoditized market, and not much is out there to convince folks to replace TVs at quicker rates. People buy one, use it until it breaks, then they buy a new one. 3D features aren't going to convince many people to replace a 2 or 3 year TV, let alone a 1 year old one. One I say commoditize, it means it's hard to eke out a lot of profit out of such markets.

I will say that from a "brand" POV, Samsung has surpassed Sony in reputation for many things. Sony has gone downhill over the last decade and couldn't leverage their cathode ray TV, audio-related brand advantage as the industry went from analog to digital; and, they couldn't help themselves with the proprietary stuff in commoditized markets. Samsung's brand probably is the best overall brand for a lot of this stuff now.

But it's still a commoditized market where premium pricing would be hard to carve out. Hard to report awesome financials quarter after quarter in such a market.
post #28 of 34
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post #29 of 34
Samsung is getting a first-hand example of what happens when they bite the hand that feeds it.
post #30 of 34
deleted
post #31 of 34
Quote:
Originally Posted by Apple ][ View Post

The hilarious part about all of these reports and news stories is that they completely contradict each other.

One minute, we hear that Apple has a stranglehold on much of the display market and they've got everything locked down because they pay huge sums upfront, and Amazon might have a hard time getting enough displays for their upcoming tablet.

And then, the very next minute, we hear that Samsung is reporting a weakened demand for displays. So why doesn't Amazon or anybody else who is supposedly in desperate need of displays just get them from Samsung?

In a day or two, there will probably be a new report about how Apple has the whole market locked down again.

There's no contradiction. You are conflating flat-screen TV displays with displays for iPads. When they talk about large panel displays, they are talking TVs. This is why Sony got out of mfring display panels, they were undercut by the Koreans. Now the Koreans are being undercut by the low-cost Chinese.
post #32 of 34
Quote:
Originally Posted by nvidia2008 View Post

From cloudgazer's link:

Samsung was the #1 brand on a revenue basis in almost every region it operated, with the exception of China where domestic brands dominate, and Asia Pacific where LGE led. Samsung also rose to #1 in total worldwide plasma TV unit share, but still trailed Panasonic in total revenues. Samsungs total flat panel TV revenue share was up slightly, to 22.2%, about the same share as a year ago. In the highly competitive North America market, Samsung continued to trail Vizio in total LCD units, but led in revenues due to a higher share of 40+ sizes.

Samsung was the #1 3D TV global brand overall, accounting for all technologies, with 34% of revenues. Within the 3D LCD TV category, Sony had the top share with 33% of revenues, while Samsung led 3D plasma TV revenues at 45%.


Something is fishy. Why is the #1 display brand having to do something weird like bundling it up with the semiconductor business?

Samsung has been #1 for a while. They have been maintaining marketshare at the loss of profits. When you sell a commodity product, you are subject to commodity pricing pressure.
post #33 of 34
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post #34 of 34
Maybe they will buy Samsung after kicking them in the nuts enough times to drive down the price.
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