Samsung (and LG's) Relationship With Apple

The introduction of the Apple iPhone, followed by Android devices was a boon for South Korean electronics manufacturers, led by Samsung and LG.  However, as noted by an article in the Joongang Daily, the relationship with Apple poses somewhat of a dilemma for the Korean firms.  As Samsung and Apple products go toe to toe in the global market, the two companies are now more dependent upon each other than ever before.

Samsung has never specified which parts it supplies to Apple. But when consumers disassemble the iPod, iPhone, and iPad, Samsung’s A4 central processing unit, NAND Flash, DRAM, and liquid crystal display panels are there in plain sight. Industry sources also say Samsung is in the running with LG to become the main display supplier for the second version of the iPad. Apple will place an order worth of $7.8 billion in parts for future productions.

As for the iPhone 4, Samsung parts account for 27.5 percent of the device, which amounts to $187.51 per iPhone, according to iSuppli, a research firm.

As shown in the accompanying graphic (click to see a full size version) Apple remains far ahead of Samsung in the global market.  With the growing strength of Android devices in the world market, it will be interesting indeed to watch the shifts taking place in market share.

Mobile Broadband is the Future

There is some interesting news these days out of the recently concluded World Mobile Congress in Barcelona.  Samsung and the other major manufacturers of smart phones have announced plans to release cheaper smart-phones that will be accessible to the masses of users around the world.  This is hardly surprising since the general logic of the digital information revolution is that semiconductors, screens and other modular devices continue to become more powerful and cheaper over the long run.

Eric Schmidt of Google gave the keynote speech in Barcelona.  As he noted in a recent article for the Harvard Business Review, we are on the cusp of a big mobile revolution that requires three developments.

• Development and deployment of fast mobile networks for the future services.


• Development of mobile money, and


• Increasing the availability of inexpensive smart phones in the poorest parts of the world.

The Size of Samsung Electronics and its Challenges

The Korea International Trade Association recently re-published an article from the Wall Street Journal on the size of Samsung Electronics and the challenges it faces. In terms of size, it is already about the size of Hewlett-Packard with roughly $110 billion in annual sales. About one third of its revenues come from companies that compete with it in selling television sets, computers, mobile handsets, semiconductors and other electronic devices. The best example of this is Apple, which is one of its biggest customers for flash memory chips and screens.

As shown in the accompanying graphic , Samsung is now a leading player in several key markets within the ICT sector. It achieved this status without major acquisitions and by running its own factories. As the article notes, this is similar to what IBM did back in the 1980s, making both the components for electronics products and the actual devices sold to consumers.

Anecdotal but Interesting: LG more popular than Samsung in North Korea

A short article in The Korea Times today notes that LG home appliances are more popular in North Korea than those manufactured by Samsung.  Even though North Korea is generally regarded as a "closed" society, quite a few Samsung and LG television sets enter the country through China.  To prevent the flow of South Korean electronics products, North Korea started a registration system for television sets in May of this year.

The most interesting point of this story was the reason for LG's popularity.  Reportedly, many people in the North don't know that LG is a South Korean brand, thinking instead that it is an international brand like Sony.  The story also notes that in electronics categories like computers and digital cameras, Samsung is considered better than LG.   Although this is anecdotal evidence of what is happening these days in North Korea, it is interesting and thought-provoking.