“Any disruption in even small parts that you wouldn’t think are really core, say headphones, can affect product launches,” Lee said.
For example, Taiwan’s HTC Corp (宏達電), which has slipped out of the top-10 smartphone makers, reported a record-low quarterly profit last month after delaying the full launch of its flagship model due to a shortage of cameras.
“Having a single supplier carries a lot of risk. Bearing that in mind, Samsung may even consider using LCD along with OLED in its signature Galaxy S range to reduce its total reliance on Samsung Display,” said Song Jong-ho, an analyst at KDB Daewoo Securities.
Samsung Display does not produce LCDs for smartphones so as it boosts sales at the lower end of market it needs to outsource LCDs.
The South Korean firm uses the more expensive OLED display only on its high-end models.
Outsourcing more components could mean Samsung will lose some of its hardware differentiation — a big selling point for the Galaxy range — and be seen as just selling generic phones, some analysts say.
The Exynos 5 Octa processor, which Samsung touted as having eight brains designed to maximize energy efficiency while multi-tasking, is not used in the S4 models sold in the US.
Instead, Qualcomm’s Snapdragon chips will power the phone in that crucial market, with Exynos chips used in select markets such as South Korea and some European countries.
“Given that Qualcomm chips are also found in rival products, and the much-heralded launch of smartphones with flexible display appears to be delayed, I’m worried Samsung is losing its hardware differentiator,” BNP Paribas analyst Peter Yu said.