The headline of the South Korean media "The Chosun Ilbo" on the economic page on the 15th was titled "Terry Gou's surprise attack: Samsung Electronics was hit to the core", and reported that Terry Gou, who threatened to "overthrow Samsung", used his trump card to Samsung Electronics. The The Chosun Ilbo reported that a senior official in the South Korean electronics industry said, "Sharp informed Samsung's TV business unit last week that it will stop supplying LCD panels from next year." Samsung received a sudden notice from Sharp and immediately held an emergency response meeting, sending executives to competitor LG Display to request the supply of panels. It is reported that LG Display is actively researching a solution to supply some LCD panels to Samsung Electronics.
Sharp provides approximately 10% of the overall demand for 4 to 5 million TV panels to Samsung Electronics' TV business unit each year, which is equivalent to giving up half of its sales for Sharp, which produces 10 million TV panels annually.
Industry analysis shows that this move is aimed at expanding Sharp brand TV sales to restrain competitors such as Samsung, and further raising panel prices. Others speculate that Terry Gou's wishful thinking may be the adoption of OLED in Apple's new models next year, and the demand for large size televisions will further increase. Therefore, it is necessary to snipe at Samsung to bring additional value to media effects and competition announcements. However, Cheng Tianzong, who has served as the Vice President of Foxconn Group and the CEO of Fuzhikang (FIH), believes that he has "thought too much".
Cheng Tianzong/Wen via Facebook
Jack Dai speculates that the hidden meaning behind it is very good. But sometimes thinking too much can lead to losing something obvious. In fact, the real battlefield lies in large-scale television. 80% of the BOM Cost for large-sized televisions is located on the panel. Why did Sharp use his strongest weapon to support the enemy and let Samsung kill Sharp on the battlefield of large-sized televisions?
This also involves Sharp's value and positioning. What Hon Hai needs most is a transformation from "manufacturing" to "commerce". Therefore, Sharp's great value to Hon Hai Z is "product" and "brand". Without these two weapons, Hon Hai's "trade channel" will always be empty.
Why is Sharp in trouble? One of the reasons is that it cannot beat Samsung on large-sized televisions, and coupled with the fact that panels and televisions belong to two independent accounting public institutions, the "weak" of televisions results in the "strong" of panels. The larger the panel industry, the stronger the voice. Samsung TV accounts for half of Sharp's panel production capacity. How can Sharp panels not treat Samsung TV as a guest of honor, and give full support to panel technology and production capacity?
From Sharp's positioning, it is self-evident which is more important or less important, whether it is a panel or a TV. If the panel continues to be a 'capital enemy', television will be like 'adding insult to injury'. Without a TV "product", Sharp would lose its "brand", and for Hon Hai, it would lose its value and fail to achieve its goal of "transformation and upgrading".
The following is Jack Dai's comment post:
The finger that decided to stop supply to SAMSUNG by SHARP
I remember reading a biological data before: "If a person raises their hand, straightens their index finger, and points to the distance, all animals will look at the person's fingertips, except for humans: humans will look in the direction of their fingers
This is another evidence that humans are intelligent animals, in addition to being able to think about nature.
On the issue of Sharp ceasing supply to Samsung, we can also think from this perspective, 'Fingers, finger direction, what's there?'.
Direction of fingers
What is there over there
2) Volume with higher profit margins
OLED became mainstream in the smartphone market in 2017
3) Volume in line with Porter's generic strategies
In Hon Hai's customer base, excluding Samsung can still fill the production capacity.
Based on the above, from the perspective of stable production capacity and increased profits, it is highly likely that Apple's new model will further mainstream and demand for OLED and large-sized televisions will increase.
And sniping Samsung has added value in terms of media effectiveness and competitive advertising. (After all, when businessmen want to turn their backs, they will first calculate the opportunity cost)