A look
inside Samung’s new high-profile smartphone, the Galaxy S4, shows that the
South Korean electronics giant is using numerous components produced by its
various internally owned subsidiaries.
A
teardown analysis conducted by the market research firm IHS, due to be released
tomorrow, has pegged Samsung’s cost of materials and manufacturing to produce
the U.S. version of the 32 gigabyte model of the S4 at slightly above $237 per
unit. Without a contract subsidy, the entry-level 16GB version of the phone
costs $639 when sold by AT&T Wireless.
The
cost is somewhat higher than that of Apple’s iPhone 5, the base model of which
costs $205 to build for a 16GB version, according to an IHS analysis conducted
last fall. It’s also well above the cost of Nokia’s Lumia 900, which costs $209
to build, IHS found at the time.
The S4
cost is not far below the cost of Samsung’s larger Galaxy Note tablet, the cost
of which IHS estimated last year to be $270.
Most
phone manufacturers source their components from many different suppliers. But
Samsung, a large, diversified manufacturer of many different kinds of
electronic components, has used its significant capabilities to supply itself
with many of the key parts inside most versions of the S4 phone sold around the
world.
“Samsung’s
strength is this ability to in-source to itself,” IHS analyst Vincent Leung
said in an interview. “They just keep adding to the list of components that
they can supply to themselves.”
One key
component that Samsung did not supply to itself for versions of the phone being
sold in the U.S. was the main applications processor. U.S. versions of the
phone contain a Snapdragon processor from Qualcomm, which contributes $20 to
the overall cost.
Versions
of the phone sold in Korea and other markets around the world contain a
Samsung-made chip called the Exynos 5 Octa that costs $28. Samsung is known to
be manufacturing at least four variations of the phone for different market
geographies around the world, including at least two being sold in the U.S.,
one going to AT&T and T-Mobile, and another going to Verizon Wireless and
Sprint, said Andrew Rassweiler, another IHS analyst.
“Samsung
is demonstrating its ability to suit the tastes of carriers in different
regions of the world,” Rassweiler said. “It comes down to what the market is
willing to spend on the features offered.”
The
fact that Samsung used the Qualcomm-made chip is a testament to the U.S.
chipmaker’s prowess. “Even with all the vertical integration it’s doing, it’s
not like Samsung has given up on Qualcomm,” Rassweiler said.
One
interesting difference between the U.S. and Korean versions resulted from the
difference in the choice of processor. U.S. versions of the phone contain an
image-processing chip made by Japan’s Fujitsu that added $1.50 to the total
cost. Leung says that in the Korean versions, some of the image processing is
handed off to Samsung’s Exynos chip.
Samsung
also supplied the flash memory used to store data on the device. IHS estimates
that 16GB of memory added $28 to the cost of the device.
The
Korean giant also supplied itself with a display and touchscreen parts, which
added $75 to the cost of components. The combined display package also includes
Gorilla Glass, a strong glass material made by U.S.-based Corning.
Samsung
is also thought to have supplied itself with several unlabeled components,
including the camera module and some wireless baseband chips.
A few
non-Samsung suppliers include Broadcom, which provided Bluetooth and Wi-Fi
chips; Maxim, which provided a power-management chip; and Triquint
Semiconductor, which provided some wireless chips.
[Source]
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