Samsung turns to overseas LCD suppliers

More than half of the LCD TVs sold by market leader Samsung are now built around LCD panels made by other companies, according to a recent market survey. 

Samsung rose to prominence as a manufacturing powerhouse but has increased its outsourcing of LCD production to take advantage of cheaper labour elsewhere in Asia, or to be closer to customers and suppliers.

The shift appears to reflect higher labour costs in Samsung's home nation of Korea.

Some 54 per cent of Samsung's LCD panels came from manufacturers in Taiwan and China in the first quarter of 2007, according to data compiled by market research firm iSuppli. 

By most estimates, the LCD panel accounts for about 90 per cent of the materials cost of a typical LCD TV or LCD monitor.

Samsung's biggest supplier was Taiwan's AUO, which made more than one third of the panels the Korean firm procured from outside suppliers. Chi Mei Optoelectronics, also of Taiwan, supplied 14 per cent of Samsung's outside panel demand.

Samsung's ability to control its manufacturing costs is helping the firm to maintain its strong position in the market, iSuppli said.

The analyst firm reported that Samsung remained the world's largest LCD TV maker, with 16 per cent of the global market. However, the size of the market shrank in the traditionally slow first quarter, cutting unit sales at Samsung by seven per cent.

Samsung's rivals also saw their sales fall, with Philips particularly badly hit. Sony moved into second place, with a 12.6 per cent market share, slightly ahead of Philips.

"Most panel suppliers suffered reduced revenue in first quarter of 2007 compared to the previous quarter," iSuppli reported. "The quarter-on-quarter revenue growth for most panel manufacturers ranged from 23 per cent to minus 30 per cent."