Key points
- Suppliers are being asked to cut costs 10 to 20 percent
- The cuts target components other than memory chips
- Chinese rivals are bidding 20 to 30 percent lower
- Hankyung says Samsung's phone unit risks a loss this year
Korean companies that make parts for smartphones, laptops and TVs are being pressed to cut their prices as memory chip costs climb, Hankyung (한국경제) reported on September 23. Many first-tier suppliers have been asked since the third quarter to lower their costs by about 10 to 20 percent, according to the report.
Most of the parts involved are not semiconductors. They include printed circuit boards, camera modules, motors, antennas, connectors, battery packs, hinges and cases. Suppliers told Hankyung that device makers are squeezing other parts to offset what they pay for memory. Foreign companies including Apple are asking for the same cuts, the paper reported.
How the pressure moves down the chain
First-tier suppliers are now asking their own second- and third-tier suppliers for price cuts.
"Direct and indirect pressure to cut costs has intensified this year," the head of one smartphone supplier told Hankyung. "The profitability of Korean parts makers will deteriorate across the board starting this year."
Large suppliers are also affected, including Samsung Display and LG Display (034220), which supply panels to Apple, Samsung Electronics and LG Electronics. LG Display shares closed at 8,500 won ($6.22) on Wednesday, down 0.2 percent. Korean markets are closed Thursday and Friday for the Chuseok holiday.
Inside Samsung, the costs are causing friction between affiliates. Samsung Electronics' mobile experience (MX) division has not been able to pass the full rise in chip costs on to consumers and faces the risk of a loss this year, Hankyung reported. The division is pressing Samsung's component affiliates hard for lower prices. Samsung Display chief executive Lee Cheong said in July, "I wish chipmakers would supply at somewhat lower prices."
Chinese suppliers move in
Chinese parts makers have recently offered prices 20 to 30 percent below Korean suppliers' as they try to join the supply chains of Samsung Electronics and LG Electronics. Device makers pass details of those Chinese offers to Korean suppliers when they ask for cuts, according to the report.
"A purchasing team at a large Korean company showed us the price a Chinese company had offered and asked whether we could match it," the head of one parts maker said. "When the price didn't match, the volume went to the Chinese company."
Another supplier's chief executive estimated that Chinese companies now handle 60 to 70 percent of orders in their segment, where Korean companies supplied most of the volume three years ago.
The bigger worry for parts makers is that the shift becomes permanent. Once Chinese suppliers pass quality certification and production tests, Korean companies may not win their volume back even if memory prices settle, the report said. Lower prices and smaller orders together could cut into the profits Korean suppliers use to invest in equipment and research.
Quotes are translated from Korean. Won figures are converted at 1,366.70 won to the dollar, the Hana Bank rate on Naver Finance on September 23, 2026.
