Samsung will rely more on semiconductor business as main income source

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While the Galaxy devices are a marvel of the tech world it looks like Samsung Electronics won’t be relying on them to stay afloat. The South Korean giant is making a solid profit from the sale of smart TVs and smartphones but those sales are eclipsed by its semiconductor business which has been bagging big clients lately in the auto industry such as Audi. This year Samsung will be targeting mobile business-to-business (B2B) solutions and system semiconductors although its semiconductor business is forecasted to drop in sales.

There are three major players in the semiconductor industry which Samsung has to compete with: Intel, TSMC and GlobalFoundries, and this competition could easily be spotted a mile away when Apple used both Samsung’s chips as well as TSMC’s chips in the iPhone 6s. It makes sense that Samsung would avoid relying on its smartphone business seeing how strong competition is, particularly in the Asian market with companies such as Huawei and Xiaomi.

Another growing area in Samsung’s business seems to be the display branch which has gotten a lot more attention from the South Korean company. A clear indicator of Samsung’s shift in business strategy is their focus: Whereas in 2013 the company was focusing mostly on the mobile world, that branch slowly declined only to be replaced by the semiconductor and display branches.


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2 years 2 months ago
Samsung also wants to avoid becoming–or being perceived as–a one-trick pony. In terms of revenue and profit contribution, Apple is essentially a smartphone company now. While the iPhone is and will continue to be massively profitable in the short term, relying so heavily on a single product is a risk. Apple is relying heavily on emerging markets like China for iPhone revenue growth, but given the economic contraction and fears around China, investors are concerned about the impact on Apple’s growth. Subsequently, the stock is getting pummeled along with stocks of other companies heavily exposed to China.