Suppliers to Samsung and Apple Suffer from the Drop in Operation Rate
According to the industry on Sunday, the production line operation rate in July by the suppliers of Galaxy S4 parts are expected to drop by 20 to 30%, since the July Galaxy S4 parts order was only for 6.5 million final units.
The suppliers whose products are specifically for the mobile phones, such as semiconductors, display and camera module, are anticipated to be affected significantly. The suppliers of cases, PCB and passive elements are also expected to suffer from decreased parts order.
The suppliers who procured their raw materials will be burdened by the inventory, on top of the decreased operation rate. Most of the suppliers to Samsung Electronics carry safety stock to prevent supply shortage. Those who have well-established inventory management systems carry 2 to 3 days’ worth parts inventory, but those who don’t carry stocks up to 10 days’ worth or more.
An insider at Wireless Business Division at Samsung Electronics commented the company “had reduced the order to each suppliers at the similar rates. Since we will start placing orders for follow-up models, such as Galaxy Note III, from August, the impact to suppliers will be minimal.”
The drought of order is indeed expected to be relieved as Samsung starts launching new models in the second half, including Galaxy Note III, Galaxy S4 Zoom and Galaxy S4 Mini, but the profitability of parts and material companies is going to be negatively impacted. The supply is expected to be greater than demand for the time being, and the suppliers to Apple starting to move into the supply chain of Samsung Electronics caused the competition to become fiercer. Taiwanese suppliers whose Apple order decreased are trying desperately to supply to Samsung Electronics.
http://english.etnews.com
The suppliers whose products are specifically for the mobile phones, such as semiconductors, display and camera module, are anticipated to be affected significantly. The suppliers of cases, PCB and passive elements are also expected to suffer from decreased parts order.
The suppliers who procured their raw materials will be burdened by the inventory, on top of the decreased operation rate. Most of the suppliers to Samsung Electronics carry safety stock to prevent supply shortage. Those who have well-established inventory management systems carry 2 to 3 days’ worth parts inventory, but those who don’t carry stocks up to 10 days’ worth or more.
An insider at Wireless Business Division at Samsung Electronics commented the company “had reduced the order to each suppliers at the similar rates. Since we will start placing orders for follow-up models, such as Galaxy Note III, from August, the impact to suppliers will be minimal.”
The drought of order is indeed expected to be relieved as Samsung starts launching new models in the second half, including Galaxy Note III, Galaxy S4 Zoom and Galaxy S4 Mini, but the profitability of parts and material companies is going to be negatively impacted. The supply is expected to be greater than demand for the time being, and the suppliers to Apple starting to move into the supply chain of Samsung Electronics caused the competition to become fiercer. Taiwanese suppliers whose Apple order decreased are trying desperately to supply to Samsung Electronics.
http://english.etnews.com
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