Samsung Electronics' Fourth Quarter Financial Report Impeccable

In stark contrast to the increasingly bleak performance of Japanese companies, Samsung Electronics’ fourth-quarter financial data was pretty impeccable: Revenue was US$52.34 billion, a year-on-year increase of 19%, net profit was US$6.77 billion, and profit margin was 12.6%, a year-on-year increase of 76%. Samsung Electronics’ four main businesses: consumer electronics, mobile communications, semiconductors and display all exhibited profit growth of more than 9%, of which mobile communications business as the main body operating profit increased by 113% year-on-year: last year was US$2.39 billion This year it was 5.08 billion U.S. dollars.

From the perspective of financial performance, Samsung Electronics’ main business is all profitable, and its business scale and profit show rapid growth. From the point of view of the group structure, the four major businesses of Samsung Electronics have strong complementarity and advance and retreat together, and they look “nearly perfect”. This is Samsung Electronics, which has made Japanese and Taiwanese electronics companies desperate. Apple, which has become so popular worldwide, is also uneasy about Samsung Electronics. Is Earth people really unable to stop Samsung Electronics?

Not necessarily, although the financial report shows that Samsung Electronics’ revenue and overall structure are quite reasonable, one of the fatal flaws is actually hidden, that is, the four major business connections are too tight.

Four major businesses with the same loss

Samsung Semiconductor's processor, storage, and communication chips, as well as the display panels produced by the Samsung Display Division, actually have a significant proportion of internal absorption, and mainly supply Samsung’s electronic terminal business, including a large number of technological advancements and lower product yields. The top accessories, such as the Super AMOLED Plus+ display panel. Samsung's mobile phones are the products that receive the most internal accessories. According to statistics, each Samsung mobile phone has an average of 60% of its components.

The core components of high-profit-added profits are all designed and produced by themselves, which saves a considerable portion of costs. The mobile phone market in the third quarter of 2012 has an astonishing statistic, that is, Apple's Samsung has divided 106% of the profits of the global mobile phone market, and the ratio is more than 100% because the profits of other mobile phone manufacturers are negative. The high profits of Samsung mobile phones will eventually return to semiconductors, monitors, and other departments to support these departments in core technology research and development and maintain their technological leadership.

At present, Samsung Electronics has world-class technology in several core components. Among them, the display department has mastered almost all current mainstream display technologies and is the OEM screen for Apple. Among them, Samsung Electronics’ unique Super OMLED Plus+ display technology is considered to be one of the best in the industry. Samsung has closed the technology to its top-end mobile phone products and sold it at high prices. For example, the sales volume exceeded 5 million in two months of listing. Taiwan's second-generation Galaxy Note.

Benefiting from the good performance of the terminal business, Samsung's semiconductor business also developed rapidly. In August 2012, it demonstrated its processor based on ARM's latest Cortex-A15 architecture. Another NVIDIA, the top manufacturer of Cortex-A15 processors, released the processor using this technology at the CES in January this year. Samsung Semiconductor leads NVIDIA for nearly half a year.

Samsung Electronics' Profit Risk

Utilizing the high profit of the terminal business to stimulate the growth of the semiconductor business and LCD panel business, and then blocking the unique core technology on its own terminal products, using the advantages in technology and cost advantages to give the product a strong competitive edge. Samsung Electronics' businesses are closely linked and form a closed industrial chain. In a sense, Samsung's mobile phone business is in opposition to all mobile phone supply chain manufacturers in the world.

Samsung's closed-loop hardware ecosystem has locked in both profits and profit risks: Once a business is in trouble, it will drag down all other businesses. Especially in the terminal business, once the sales volume is frustrated, the profits of all departments will be reduced. For example, in the core mobile phone business, the sales volume will increase by 1%, and all the departments will benefit. The final result is reflected in the overall performance of Samsung Electronics, which is several times growth. Conversely, the sales volume is reduced by 1%, and all departments will also significantly reduce their production, which is reflected in the overall performance of Samsung Electronics, which is several times the attenuation.

This provides a way to defeat Samsung Electronics. It does not need to face up against the Samsung Electronics Empire. It only needs to weaken its market share or profit for certain products, and the impact will be multiplexed on the Samsung Electronics Group. The negative impact will continue to be played and transmitted among the various departments of Samsung Electronics. Over time, the overall strength of Samsung Electronics will be greatly reduced.

Apple Mode and Samsung Mode

This contrasts sharply with the global supply chain system that Apple has built. Apple has chosen a procurement model for placing orders. Sometimes it also designs components, such as processors, but it does not involve production. This will also minimize the risk of Samsung Electronics to the minimum, but the impact is that Apple's control of the supply chain is very low, habitual out of stock at the peak sales, and sales of parts backlog when the lower, leaving the next generation of products can not be introduced.

Compared with the Samsung hardware system, Apple has established a global supply chain that has less control, but the risk is relatively low. Even if a technology is backward or the output cannot keep up, it can be transferred to other homes. It will not drag on for a long time. . What's more, the global supply chain is a big group. Apple makes money. Sharp, LG, Foxconn, and so on all make money, and it won't cause resentment. In contrast, Samsung and Japanese enterprises have been hated by them.

Samsung Electronics has apparently long been aware of the defects of its own system. Its semiconductors, displays, and other services are all open to the foundry business and provide services to numerous manufacturers including Apple. This is largely to avoid the risk that eggs cannot be placed in the same basket. Although OEM services will cause competitors to use their own technology to attack their own products, as long as the top technology mentioned above is not open, Samsung products can suppress competitive products.

However, this problem has come again. If the top technology is not opened up and the foundry business is difficult to ensure competitiveness, this is a dilemma. In general, Samsung Electronics is like a balance. Foundry and closed-loop ecosystems are like heavy objects on both sides. They are slightly careless. Under the influence of external forces, the balance will be out of balance, and it will also reveal flaws in the Samsung Electronics Empire. when.