In 2021, Samsung Electronics showed a significant increase in the amount of raw materials procured from outside for its major businesses such as home appliances, mobile devices and semiconductors. This year, the company is expected to focus on a company-wide profitability strategy as the cost of materials increases due to the ongoing War with Ukraine and logistics costs burdened by soaring oil prices.
Prior to organizational consolidation at the end of last year, Samsung Electronics procured a high proportion of raw materials from overseas, including consumer electronics (CE), IT/ mobile (IM), and device solutions (DS), according to the company's business report on March 21.
Analysts say this is due to soaring prices of key raw materials for home appliances and mobile devices. "The price of display panels, the main raw material for TVS and monitors in the consumer electronics sector, has increased by about 39 percent year-on-year, and the price of mobile AP has increased by about 19 percent," Samsung electronics said.
In 2021, Samsung's purchase of display panels for TVS and monitors from Chinese display panel makers BOE, Huaxing Optronics and AU Optronics doubled to 10.582.3 billion won (about 55.1 billion yuan) from the previous year, In particular, display panels for TV display devices accounted for 33.5 percent of the total raw materials of the home appliance industry, up from 23.7 percent last year.
An industry insider said, "As far as I know, the price of LCD panels soared last year, leading to a significant increase in the purchase amount. Most LCD panels for TVS come from Chinese companies and few from Samsung Display.
"Samsung Electronics asked Samsung Display to expand production last year to increase its bargaining power with Chinese manufacturers, but Samsung Display will stop producing LCD panels within this year and will rely more on China for LCD panels in the future," he explained.
In 2021, Samsung electronics purchased 6.21 trillion won of central processing units (cpus) for mobile application processors such as smartphones, up 10 percent from 5.635.6 trillion won. The IM division's camera module prices fell about 44 percent from a year earlier, and the materials it purchased from Samsung Electronics fell to 5.849.6 billion won last year, down from 5.909 trillion won in 2020.
But the proportion of purchases rose as the cost of materials supplied by most overseas customers increased. Last year, external purchases of small and medium size display panels for mobile devices, including mobile devices, from China's BOE and Huaxing Optoelectronics amounted to 2.51 trillion won, up about 600 billion won from the previous year.
The purchase of materials in the semiconductor sector also increased. In its business report, Samsung electronics said the prices of semiconductor wafers, the main raw material in its DS division, rose about 1% from a year earlier, while Flexible Printed Circuit Assembly (FPCA) prices in its display business rose 8%. (Wafers are the raw semiconductor base material made from silicon; FPCA is a component that connects the display driver information of various digital devices to the panel.
Samsung electronics has received 300mm 12-inch wafers from SUMCO of Japan and SK Siltron of Korea, which are mainly used for memory semiconductors. The value of wafer purchases was 2.313 trillion won last year, up slightly from 2.31 trillion won in 2020.
In addition, Samsung Electronics purchased 2.83 trillion won worth of display-drive circuit parts from Apple and other companies last year, an increase of more than 600 billion won from 2.19 trillion won last year. The cost of SOC materials supplied by harman from Nvidia and Renesas was 488.6 billion won, up from 404.3 billion won last year.
