Only this weekend! Samsung Discover deals! Galaxy S24 Ultra, Watch 6, Z Fold 5 or, Z Flip 5.

SamMobile has affiliate and sponsored partnerships. If you buy something through one of these links, we may earn a commission.

Notifications
    News for you

    Samsung’s camera business officially joining the bottom feeders

    Camera
    By 

    Last updated: October 26th, 2020 at 11:39 UTC+01:00

    Samsung Electro-Mechanics today formally confirmed a mid-October report claiming the company is expanding into the entry-level smartphone camera market. The part about that historic contract coming from Samsung (Electronics) itself is still unofficial, but the insiders behind the original claim have a near-spotless track record, so it's probably safe to consider it accurate. During an earnings call with analysts held after today's announcement of the company's Q3 financials, EVP Bae Kwang-wook confirmed the move.

    According to the senior executive, Samsung Electro-Mechanics already accepted contractual obligations constituting its move into low-end mobile camera module manufacturing. In fact, it even started fulfilling some orders during the third quarter of 2020. By this time next year, that segment will account for about 10% of the company's sales, the EVP said during the call.

    Why moving into entry-level anything is rarely a business success indicator

    Bae also provided some estimates in regards to how much money this is expected to make, but even if he wasn't biased in a sense that he wants to make his company look good, the assumptions given to analysts are at least partially influenced by an attempt at extrapolating historic data and using it to predict earnings. Instead of, you know, just flat-out saying how much its first contracts are worth.

    This would make more than zero sense in any other smartphone camera component category but the one Samsung Electro-Mechanics is now entering. Because most businesses, especially those as derivative as consumer electronics, rely on creating value to earn money. The more you create, the more you can charge, or get away with charging, depending on whether you're asking the buyer or the seller. As you might imagine, there's a cap to this economic behavior that's proportional to the complexity of the task at hand. Manufacturing is a secondary sector, but component production, by itself, is still way lower than consumer electronics manufacturing, which usually means “consumer electronics assembly” these days.

    All of that means this move to deliver camera modules to low-end smartphones probably won't drive any meaningful growth in terms of whatever bottom line Samsung Electro-Mechanics will have to report a year from now. Sure, it probably won't lose any more money on this expansion, like entry-level smartphone companies actually can and often do in ultra-competitive markets like India. But you can disregard the prospective business expansion angle Bae is selling here. Because Samsung would not be entering the low-end smartphone camera category if there was any other segment to service instead.

    This is all evidenced by the fact that despite producing hundreds of millions of cheap smartphones on a yearly basis for over a decade, Samsung Electronics has never managed to squeeze into its sister company's production capacities until right now. Why? Because that sister company was printing money doing better-paying contracts, many of which were from Samsung Electronics itself. In other words: if you're part of a consumer electronics supply chain, you make the big bucks doing contract work for the next Galaxy Note or iPhone, not the next Galaxy A twenty-whatever.

    So, take this news as an indicator that Samsung Electro-Mechanics appears to be out of ideas in the smartphone camera business, no matter how many more hundreds of millions of modules it projects to sell next year. It's 300 million, in this case, which adds up to 1.2 billion in total. That's a pretty impressive figure, right? You almost don't want to burden it with boring context. Such as, for example, the fact that a quarter of it will probably ruin your profit margin by several degrees of magnitude, despite being the entirety of your projected growth.

    Just to add some final context, flagship camera modules are currently more expensive than even the thing responsible for the “smart” part of smartphones – chips. Yes, imagine all that extra money Samsung Electro-Mechanics won't be making next year because it found nothing better to do than to waste resources on budget component production, while the big bucks are already being made and that market share is its own to lose. But you won't hear that on any analyst call, as those tend to only involve people paid to be maximally optimistic in their public communications.

    BusinessCamera Galaxy A52Galaxy A72

    You might also like

    Your Galaxy A52 is one step closer to its end, but you could upgrade today

    Your Galaxy A52 is one step closer to its end, but you could upgrade today

    It hasn't been long since your Galaxy A52 received its third and likely last major firmware update. Samsung rolled out Android 14 and One UI 6.0 for the Galaxy A52 earlier this month, and now, the company has turned its full attention to its latest Galaxy A55 model. And maybe you should, too. Samsung announced […]

    • By Mihai Matei
    • 2 days ago
    One UI 6.0 (Android 14) rollout for Galaxy A72 continues to spread globally

    One UI 6.0 (Android 14) rollout for Galaxy A72 continues to spread globally

    We're in the third month of the year and Samsung fans are waiting with bated breath for the One UI 6.1 update to arrive on their devices. However, Samsung still isn't done rolling out the One UI 6.0 (Android 14) update to all eligible phones and tablets. The list of devices that haven't received One […]

    • By Abhijeet Mishra
    • 6 days ago
    Android 14 update expanding to Galaxy A52 in Asia and Europe

    Android 14 update expanding to Galaxy A52 in Asia and Europe

    While most eligible Galaxy smartphones and tablets received the Android 14 update before the end of last year, the update for the Galaxy A52 was delayed. In Russia, the popular mid-range smartphone received the Android 14 update in January. Now, the update is rolling out in Asian and European countries. Galaxy A52 gets Android 14 […]

    • By Asif Iqbal Shaik
    • 6 days ago
    Samsung’s belated new year’s gift to Galaxy A72 users is Android 14 update

    Samsung’s belated new year’s gift to Galaxy A72 users is Android 14 update

    The Galaxy A72, which was Samsung's priciest mid-range smartphone in 2021, was launched with Android 11 onboard. The phone is now getting its last major Android OS update: Android 14. The update is currently rolling out in Russia, but it should quickly reach other countries within a matter of a few days. Galaxy A72 gets […]

    • By Asif Iqbal Shaik
    • 2 months ago
    LTE Galaxy A52 finally getting One UI 6 (Android 14) update

    LTE Galaxy A52 finally getting One UI 6 (Android 14) update

    The One UI 6 (Android 14) update is now available for the regular Galaxy A52. The 5G model and the Galaxy A52s received the update a couple of weeks ago, and the wait is now over for owners of the Snapdragon 720G-powered LTE variant as well. The rollout started earlier this week in Russia and […]

    • By Abhijeet Mishra
    • 2 months ago
    December 2023 security update has reached Galaxy A52

    December 2023 security update has reached Galaxy A52

    While the Galaxy A52s, Galaxy A53, and Galaxy A54 have received the Android 14 update, the Galaxy A52 will not. However, Samsung hasn't forgotten its mid-range phone. The Galaxy A52 is now getting the December 2023 security update in several countries across Asia, Europe, North America, and South America. Galaxy A52 gets December 2023 security […]

    • By Asif Iqbal Shaik
    • 3 months ago