[Apha Biz=(Chicago) Reporter Paul Lee] South Korea's leading electronics parts makers, including Samsung Electro-Mechanics and LG Innotek, have increased their dependence on transactions to their largest customers in the first half of this year, a report showed.
Amid the prolonged slump in the global IT industry as well as China, the two companies have taken on the urgent task of diversifying their business structures into new businesses such as electric vehicles to reduce their dependence on Samsung Electronics, Apple and Chinese smartphone makers.
According to a semi-annual report by Samsung Electro-Mechanics on the 21st, the company accounted for 36.3% of sales of Samsung Electronics and its subsidiaries as of the first half of the year. This is an increase of 4.1% point (p) from 32.2% in the first half of last year.
Samsung Electro-Mechanics has been pushing to diversify its customers in the Chinese market to reduce its dependence on Samsung Electronics, but the portion of sales to Samsung Electronics seems to be growing again as the local smartphone market has stagnated and IT demand has declined due to the economic downturn caused by China's prolonged COVID-19 last year.
As of the end of 2021, Samsung Electro-Mechanics' total sales fell to 28.6%, but it began to rise again. Although it exceeded 40 percent in the first quarter, the portion is believed to have decreased relatively in the second quarter as the Chinese market has been "reopened" and the launch of new smartphones has been activated starting this year.
LG Innotek also said in its semiannual report that sales from a single customer amounted to 6.2216 trillion won. LG Innotek's sales in the first half of this year amounted to 8.2831 trillion won, accounting for 75.1% of Apple's estimated sales. As of the first half of last year, Apple accounted for 72.1 percent, up 3 percent from this year.
In particular, as parts makers also have a larger portion of Apple-related sales in the second half of this year than in the first half of this year as new smartphones will be released in the second half of this year, LG Innotek's sales dependence on Apple is expected to expand further as of the end of this year.
For parts makers such as Samsung Electro-Mechanics and LG Innotek, the presence of its largest customers is a prop that can expect solid sales in times of recession. However, there are concerns that sluggishness of customers may lead to financial difficulties when excessive reliance on sales increases. In fact, LG Innotek's sales rose 8.2% year-on-year in the first half of this year, but its operating profit also fell 75.1% year-on-year.
Samsung Electro-Mechanics and LG Innotek are planning to diversify their business portfolio by actively targeting markets such as automotive beyond mobile markets, which are existing demand sources. Samsung Electro-Mechanics is expanding its competitiveness in the market by speeding up the development of electronic products in its flagship MLCC (Layer Ceramic Capacitor). According to Samsung Electro-Mechanics, the company's sales of electric MLCCs have more than doubled compared to 2021.
AlphaBIZ 폴 리(hoondork1977@alphabiz.co.kr)
