The sharp rise in memory chip prices over the past year has forced electronics manufacturers to adopt new strategies to control production costs. Smartphone makers, in particular, are under pressure because they produce devices across multiple price segments, from budget models to premium flagship smartphones.
Increasing prices for affordable smartphones could negatively impact sales, especially in price-sensitive markets. As a result, manufacturers are exploring alternative ways to offset rising component costs. Premium devices, on the other hand, are less sensitive to price changes, allowing companies to pass some of the cost to consumers. However, even for high-end devices, brands are seeking ways to maintain competitive pricing.
According to a report from Korean publication DealSite, Samsung is adopting an unusual approach to deal with rising RAM costs. The company is reportedly replacing some of its in-house components with parts sourced from Chinese suppliers.
The report suggests that Samsung has started using OLED panels manufactured by Chinese display maker CSOT in certain mid-range smartphones, including the upcoming Galaxy A57. Previously, Samsung relied primarily on its own display manufacturing units for OLED panels used in its smartphones.
In addition to display changes, Samsung is also said to have switched hinge suppliers for its foldable devices. The company previously worked with South Korean hinge supplier KH Vatec for its Galaxy Z series but has reportedly moved to Chinese supplier Huanli for the Galaxy Z Flip7.
Furthermore, some ultrawide camera modules used in Galaxy S series smartphones are now reportedly sourced from Chinese manufacturers instead of traditional Korean suppliers.
Samsung believes that increasing its reliance on Chinese component suppliers will help reduce overall production costs and absorb the impact of soaring RAM prices. By lowering manufacturing expenses, the company can avoid increasing smartphone prices for consumers.
While some critics argue that Korean components are traditionally associated with higher quality, industry experts note that Chinese manufacturers have significantly improved their technology and production standards in recent years. They are now able to supply comparable components at lower costs.
Sources familiar with the matter believe Samsung may continue expanding its use of Chinese suppliers in the coming years, a move that could reshape its supply chain and potentially impact local Korean component manufacturers.