BOM (Bill of Materials) for Mobile Phones

The mobile industry is not like the PC industry, populated by manufacturers that are just component assemblers of the various parts (memory, CPU, HD, …). In the mobile industry, the more vertical integrated mobile manufacturer is Samsung, a market leader in displays, memory and CPUs for mobile phones that also sells its quality components to other OEMs and ODMs (Apple To Buy Components Worth $7.8 Bln From Samsung Electronics This Year).

As shown in the graph above of a typical bill of materials of a mobile phone, those parts are the costlier and more important of a mobile phone: from this point of view, Samsung looks like a vertical mainframe manufacturer from the 60-70s, but with much of its software developed by an external provider (Android). So not only they have an obvious cost advantage on the low end of the smartphone market, they are also the leaders managing component droughts and bullwhip effects, which are very profit destroying in the mobile industry. Finally, note that the first reason Nokia has decided to go the Microsoft’s route is to differentiate enough from Samsung’s Android offerings, the second biggest mobile manufacturer after Nokia.

 

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