Samsung Electronics won’t be applying Exynos, the premium application processor from its System LSI division, to the low-end Original Development Manufacturing (ODM) smartphones to be launched next year, according to industry sources on Sept. 9.
Instead, Qualcomm or Mediatek are likely to be chosen as the suppliers, meaning less orders to go around for local smartphone parts manufacturers.
Samsung recently said it would be expanding the production of ODM phones to up to 100 million handsets to cut costs. This would account for about one-third of Samsung’s usual annual smartphone supply of 300 million.
For ODM orders, Samsung does little more than request the specs and slap on its label on the end product. The rest, including the parts supply and the assembly is up to the commissioned manufacturer. These phones cost between $100-200. Samsung has indicated it would be relying mostly on Chinese ODM producers
Previously, industry sources had predicted that the tech giant would still manufacture key parts such as AP and memory chips. The Exynos brand has been used in even the cheaper Galaxy smartphones, but it looks like there is a new policy in place now.
Local suppliers, however, aren't too happy about Samsung’s growing reliance on ODM phones, according to market watchers, since they are likely to suffer from smaller orders. “Everyone will be affected, including those that have been supplying mostly high-end parts to Samsung that are now expected to suffer a minimum 10% cut to their revenues,” said one source close to the suppliers.
Samsung has been looking for ways to hang onto its market share in China amid intensifying competition with local players such as Huawei, OPPO and Vivo. In the second quarter of this year, Samsung’s had only a mere 1% of the world’s largest smartphone market. Chinese ODM smartphone makers are also trying to sink their teeth into emerging markets such as India, where Samsung is at second place in terms of market share.
For its next year ODM models, China’s Wingtech has been selected as Samsung’s partner, along with Huaqin.
Some market watchers warn that Samsung may not be able to ship the handsets even if it does secure 100 million of them due to the high possibility that quality-wise, they won’t measure up.
The Elec is South Korea’s No.1 tech news platform.