JAPAN TIMES


 

The Galaxy Note 7 smartphone debacle might mar Samsung Electronics Co.’s image in the global market, but its impact on Japanese firms and sales is likely to be limited, analysts say.

Even if Samsung experiences a drop in global sales from the fire-prone smartphones, Japanese firms supplying its parts won’t really be affected — and might actually benefit — as Apple and Chinese makers use more Japanese parts than Samsung and could expand sales if Samsung stumbles, they said.

The Galaxy Note 7 made its overseas debut in August but was soon discontinued after dozens of cases of overheating and fire sparked a recall and an international airline ban.

While the Note 7 did not come to Japan, the fire risk issue has received heavy coverage over the past few weeks. While that might hurt the Galaxy brand, Samsung’s smartphone sales here will likely remain
unaffected.

“Samsung’s smartphone share in the Japanese market has been low (before the Note 7 problem), so I don’t think it will do much to damage its sales here,” said Tadayuki Shinozaki, an analyst at MM Research Institute in Tokyo.

In Japan, Apple Inc.’s iPhone dominated in fiscal 2015 with a share of 52 percent, followed by Sony Corp. and Sharp Corp., the mobile phone market researcher’s data say. Although Samsung has the world’s largest market share, it didn’t even make the top five in Japan.

Still, at least one local giant, NTT Docomo Inc., actually considered selling the handset in Japan until it was clear the problem couldn’t be fixed by replacing the batteries.

“We decided not to sell it and Samsung also told us it would not provide the model to the Japanese market,” Docomo President Kazuhiro Yoshizawa said at a news conference last week.

Asked how the Note 7 fiasco has affected sales of its other Samsung models, such as the Galaxy S7 Edge, Yoshizawa said Docomo, which has the most subscribers, had not seen any impact.

Despite the fact that Japan’s smartphone makers are barely visible in the global market, its parts makers play large role in the industry.

“I don’t think (the Note 7 problem) will have such a negative impact” on major parts makers, said an analyst in the field who spoke on condition of anonymity because the topic is considered sensitive. Parts makers are often reluctant to disclose the identities of their clients.

“In general, if Samsung’s smartphone sales decline, other makers’ handsets will be sold more,” which would actually create more business for Japan’s parts makers, the analyst said.

This is because Samsung also makes some parts by itself, unlike rivals who are fully dependent on outside procurement, he said.
But a few, such as Osaka-based Hosiden Corp., seem to have strong ties with Samsung and might face trouble, he added.

Hosiden, which makes switches and connectors, did not say exactly how heavily it relies on Samsung’s business but said it was not that concerned about the Note 7 debacle, saying revenues from business with Samsung are not so big.

Also, Samsung has reportedly said it will compensate the parts suppliers who were involved.

Murata Manufacturing Co., which makes communication modules and other parts, did not officially admit that Samsung is a client, but its spokesman said the firm was investigating how the Galaxy Note 7 problem might affect earnings.