Due to popularity of ‘Galaxy Fold’, Samsung Electronics is planning to increase the output of foldable Smartphones in 2020 by at more than ten times compared to the output of foldable Smartphones in 2019. It is heard that Samsung set a goal for next year, which is to sell 6 million foldable Smartphones at the maximum, and is currently looking into whether its goal is realistic. Considering the fact that the sales volume of Galaxy Fold in 2019 is around 500,000 units, Samsung Electronics is planning to increase the sales volume by more than ten times in just a year. This indicates that Samsung’s confidence in the success of foldable Smartphone has grown.
According to the industry, Samsung Electronics’ Wireless Business Department is currently looking into supply and demand with Samsung Display in order to increase the output of foldable Smartphones in 2020 up to 6 million units. Samsung Display is currently checking its production capacity and production yield to see whether it can keep in pace with this goal.
Samsung’s goal is a very aggressive number that exceeds the initial estimate from the market. Market research company called IHS Market estimated that there will be about 3 million foldable Smartphones in 2020 while DSCC is estimating that the number will be between 4 million and 5 million. Both of them predict that most of these foldable Smartphones will be from Samsung Electronics.
Annual sales volume of Galaxy Note, which is the highest model of Samsung Electronics’ Galaxy series, exceeds 10 million units. If foldable Smartphone establishes itself as a premium Smartphone along with Galaxy Note, it can become a new product line that can increase the profit rate of Samsung Electronics. The industry estimates that there will be about 10 million foldable Smartphones in 2021.
According to representatives from the industry, Samsung was initially looking into increasing the output of foldable Smartphones up to 10 million units. Its confidence in the potential of foldable Smartphone has grown as it has received many positive reviews for Galaxy Fold when it only produced Galaxy Fold in small quantity in order to examine responses from consumers towards foldable Smartphone that was unfamiliar to them. Fact that there are positive views towards foldable devices overall has also contributed to popularity of Galaxy Fold.
In order to increase the output of foldable Smartphones, Samsung needs to make additional investments into facilities and equipment in Vietnam. It also needs to increase the production capacity of major materials and components such as transparent PI (Polyimide) and UTG (Ultra-Thin Glass). Because there is a possibility that current supply and demand for UTG especially may be insufficient, industries are interested on whether Samsung will make additional investments.
How many models of new foldable Smartphones Samsung will introduce next year is important. If it continues to carry out marketing for Galaxy Fold, there is a chance that the release date of clamshell design-based Smartphone, which is its next foldable Smartphone model, may be delayed to early 2020 or the middle of 2020. If the release date of clamshell design-based Smartphone is delayed, there is a chance that the release date of another new model, which is expected to be released during the second half of 2020, may get pushed back to the end of 2020 or 2021. Entire shipments is proportional to number of new models.
“Although the yield of foldable panels is lower than that of OLEDs, there is not any huge issue technologically as Samsung Display is able to handle tens of millions of units annually.” said a representative for the industry. “However, it is a bit early to predict demands for foldable Smartphones in 2020 due to insufficient supply of Galaxy Fold within the market.”
Mobile network businesses are still being cautious about recent popularity of Galaxy Fold because they believe that the popularity comes from limited supply and that consumers are just ‘curious’ about a new form factor.
As a result, many predict that it will not be easy for Galaxy Fold to establish itself despite mass-production if Samsung Electronics does not secure differentiated usability, competitive price, and stability. Distribution network is also concerned that the process of securing inventories of expensive foldable Smartphones may have a negative impact on liquidity.
“Smartphone manufacturers have no choice but to change form factor in order to secure profitability as demands for premium Smartphones continue to drop.” said a high-ranking official of a mobile network business. “It may take a while to build up positive cases of applications of a foldable Smartphone and to improve its marketability.”
Staff Reporter Bae, Okjin | email@example.com & Staff Reporter Park, Jungeun | firstname.lastname@example.org