Samsung warns of weakened demand for chips, displays in second half of 2011
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.
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.
Comments
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.
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.
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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.
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 !
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.
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
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.
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
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.
Maybe the "weak growth on chip orders and a downturn on displays" refers to orders from Apple.
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.
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.
http://www.displaysearch.com/cps/rde..._on_record.asp