New Galaxy M phones to have Chinese OLEDs instead of Samsung

Samsung Display is the primary supplier of OLED screens for Samsung's mobile devices. The Korean conglomerate relies heavily on vertical integration. It sources a wide variety of components that go inside its mobile devices from sister companies.

With intensifying competition in the entry-level smartphone segment, Samsung is looking at every possible way to reduce prices in order to increase competitiveness. It's now reportedly going to use Chinese OLEDs in new Galaxy M phones instead of sourcing them from Samsung Display.

Samsung wants to cut costs, improve margins on Galaxy M phones

A report out of South Korea claims that Samsung has inked a contract with Chinese display manufacturer BOE. It will use the OLED panels that BOE provides in new Galaxy M smartphones. This is part of Samsung's efforts to reduce the production cost in order to retain its position as the world's top smartphone vendor.

The report mentions that Samsung will use the OLED panels that it gets from BOE in new Galaxy M phones that are due in the second half of this year. This will be the first time that Samsung will buy OLED panels from BOE. It has previously used LCDs from the Chinese company.

Samsung Display remains the leading manufacturer of mobile OLED panels in the world. It understandably charges a premium for its products. Companies like BOE are trying to make a dent in its market share so they offer their products at more competitive prices.

Samsung can thus benefit from a market dynamic that its own sister company has created. By using cheaper OLEDs from China, it can improve margins on the high-volume Galaxy M handsets while also keeping their prices low.