Samsung’s 5G main entry-level models cut nearly 9 million units, which may trigger a price war for mobile phone chips

On December 26, according to Korean media TheElec, due to global inflation suppressing the demand for smartphones, and a certain function causing problems with mobile phone operation, Samsung slashed orders for its main entry-level 5G model, the Galaxy A23. 12.6 million units dropped sharply to 4 million units, a decrease of 8.6 million units, a drop of up to 70%. This is currently the model with the largest number of orders cut by Samsung. Since this model all uses Qualcomm chips, Samsung’s big cut orders, the industry is worried that Qualcomm’s inventory will increase sharply, detonating a price war for mobile phone chips, and MediaTek will also face pressure.

Industry insiders pointed out that the Samsung Galaxy A23 is divided into 4G and 5G versions. The total annual sales volume is estimated to be about 30 million units, accounting for about 10% of Samsung’s total annual shipments. It is considered a hot-selling model. Among them, the 5G version is priced at around US$200, which is Samsung’s main 5G entry-level model.

It is reported that the chip of the Galaxy A23 5G version uses Qualcomm’s “Snapdragon 695”, and the lens is supplied by Sunny. As Samsung slashed 70% of its orders, the industry judged that Qualcomm’s inventory may increase sharply. In order to eliminate the inventory, Qualcomm will inevitably have to bargain, detonating a price war for mobile phone chips, which is not good for MediaTek.

Originally, the market believed that after entering the 5G generation, except for Apple and Samsung’s self-developed chips for some models, there are only two main suppliers of mobile phone chips in the world, MediaTek and Qualcomm. Moreover, MediaTek and Qualcomm mainly use TSMC’s manufacturing process, and the cost structure is different. Not much, the two powers are less likely to initiate a price war. However, recently, the buying momentum of Android phones has been weak, and foreign investors in the United States have warned that Qualcomm has successively launched a price war on entry-level 5G chips. According to past experience, price wars bring fluctuations in market share and gross profit margins.

In view of the future market operation strategy, MediaTek has previously emphasized that under the diversified layout of the company, with the fermentation of new applications such as automotive electronics and data centers, the semiconductor industry will enter a “diversified growth era”. will weaken.

Affected by the poor buying momentum of Android phones this year, MediaTek has revised down its annual revenue growth target. The latest report from the market research agency Counterpoint also pointed out that although MediaTek continued to be the leader in global smartphone processor shipments in the third quarter of this year, its market share fell to 35%, a quarterly decrease of 3 percentage points, reflecting weak demand for mid-to-low-end mobile phones and Affected by continuous inventory adjustments, it is expected that shipments will continue to decline this quarter due to sluggish demand and mainland mobile phone brand customers cutting orders.

Due to Qualcomm’s focus on the high-end market and Samsung’s new flagship Galaxy S23 series orders for next year, its market share increased to 31% in the third quarter. The momentum of shipments is also weak, and it is not expected to enter the recovery cycle until the second half of next year.

Editor: Xinzhixun – Rurouni Sword