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        South Korea’s Smartphone Camera Industry Growing at a Rapid Rate

        May 23, 2019

        Smartphone camera industry is going through a boom. Not only ‘multi-camera’ trend, which indicates that there are at least two cameras on a Smartphone, is being generalized amongst low-end Smartphones, camera part market is also growing rapidly as there are triple and quadruple cameras on single Smartphone. It is shown that performance of Samsung Electronics’ partners that supply camera-related parts has increased greatly. Not only is there a business that mad its biggest quarterly sales, but there will also be a business that is expected to make more than $840 million (1 trillion KRW) in annual sales this year.
        ◊Rise in performance by camera part industry
        Samsung Electro-Mechanics, which supplies rear camera modules for Galaxy series, made $1.79 billion (2.1305 trillion KRW) and $160 million (190.3 billion KRW) in sales and operating profit respectively during the first quarter of 2019. Compared to the first quarter of 2018, its sales and operating profit increased by 6% and 24% respectively. Its module business brought in $799 million (951.2 billion KRW) in sales that is 6% more than what it brought during the first quarter of 2018. “Our sales in the first quarter increased compared to the fourth quarter and first quarter of 2018 due to increase in sales of high-performance multi-cameras.” said Samsung Electro-Mechanics.
        Partron, PowerLogics, CAMSYS, and MCNEX also supply front and rear camera modules for Galaxy series to Samsung Electronics. Their operating profits in the first quarter increased by triple figures compared to that of 2018.
        PowerLogics made $249 million (296.2 billion KRW) in sales during the first quarter and made the highest sales out of four suppliers. Its sales increased by 66.3% compared to its sales from the first quarter of 2018. Its operating profit ($12.4 million (14.8 billion KRW)) also increased by 284.4% compared to that from the first quarter of 2018. Partron made $246 million (293.4 billion KRW), which is 27.7% increase, in sales and $21.9 million (26.1 billion KRW), which is 174.1% increase, in operating profit. Both their sales and operating profits easily exceeded expectations.
        MCNEX made $211 million (250.8 billion KRW), which is 60.7% increase, in sales and $16.5 million (19.6 billion KRW), which is 179.1% increase, in operating profit. CAMSYS made $145 million (172.8 billion KRW), which is 61.8% increase, in sales and recorded its largest first quarter sales ever. It made $6.47 million (7.7 billion KRW), which is 147.2% increase, in operating profit.
        Haesung Optics, which manufactures camera lenses, actuators, and camera modules, made $84.1 million (100.2 billion KRW), which is 81.3% increase, in sales. Its operating profit was $2.94 million (3.5 billion KRW). Optrontec, which manufacturers optical filters for camera modules, made $59.2 million (70.5 billion KRW), which is 97.8% increase, in sales and $5.88 million (7 billion KRW), which is 97.7% increase, in operating profit.
        ◊Multi-camera brings in positive impact despite Smartphone market being stagnant
        Global Smartphone market has stopped growing. There are 1.4 billion Smartphones annually due to popularization of Smartphone. Despite Smartphone market being stagnant, main reason why camera part manufacturers’ performance increased significantly is because there has been rapid increase in demands for their products as Smartphone manufacturers started to apply more cameras to each Smartphone. If dual-camera was the latest technology in 2018, triple-camera is the recent trend in this year. ‘Penta-camera’ has also been generalized as Smartphone manufacturers have begun to apply dual-cameras to the front and rear triple-cameras to the back of a Smartphone.
        Fact that Samsung Electronics reshuffled its low-end and medium-end Smartphone lineup with Galaxy A series and Galaxy M series and greatly improved camera performance of these Smartphones is the reason why South Korean camera module businesses saw huge jump in their business performance. Samsung Electronics greatly expanded its low-end and medium-end Smartphone lineup to compete with Chinese Smartphone manufacturers that are putting out high-end Smartphones at an affordable price. Resolution of rear-cameras of low-end Smartphone series is now 48MP at the maximum while resolution of front-cameras is 32MP at the maximum. Positive sales of Galaxy S10, which is Samsung Electronics’ flagship Smartphone released during the first half of this year, have also contributed to boosting performance of South Korean camera module businesses.
        Camera part manufacturers have benefited from cameras emerging as important devices that determine performance of a Smartphone. Because technologies on Smartphone camera are expected to continue to evolve, businesses that supply high-value parts are expecting huge jump in their business performance.
        “Increase in supplies of multi-camera modules greatly helped our performance in the first quarter.” said CAMSYS. “Increase in percentage of sales of camera modules with super-high pixels improved our profit and increase in ASP (Average Sales Price) of camera modules by 26.6% was also a huge factor in improving our performance.”

        South Korea’s Smartphone Camera Industry Growing at a Rapid Rate

        ◊Camera module businesses expect positive forecast in the second quarter as well
        Industries predict that performance of major camera part manufacturers will also be positive in the second quarter as well. Camera part manufacturers are expecting that this positive trend will continue for a while as Samsung Electronics is focusing on low-end and medium-end Smartphones to secure market shares and is preparing to release Galaxy Note series during the second half of this year.
        “Although forecast in the second half is not clear, camera module businesses are expecting that their overall performance will continue to improve during the first half as multi-camera trend is expected to continue.” said a representative for a South Korean camera module business.
        It is possible that there will be medium-sized camera module businesses that will make $840 million (1 trillion KRW) in annual sales this year. Stock firms estimate that Patron’s annual sales will surpass $840 million for the first time in six years. PowerLogics is also expecting to see its annual sales surpass $840 million this year.
        “Speed and range of improvement within low-end and medium-end camera module industries are faster and bigger than initial expectations.” said Cho Cheol-hee who is a researcher for Korea Investment & Securities. “Profits are increasing fast due to increase in sales and improvement in yield and ASP is also rising as well as Smartphones are equipped with cameras with higher pixels.”
        ◊Evolution of Smartphone camera
        Ultimate goal of a Smartphone camera is to replace traditional cameras. Just as Smartphones are replacing compact cameras, Smartphone manufacturers are attempting to apply performance of expert-level cameras such as DSLR to Smartphones. Fact that multi-cameras are quickly being adopted by latest Smartphones has a same context. Adding auto-focus and various functions into Smartphone camera is Smartphone manufacturers’ attempt to include functions of traditional camera into Smartphone.
        It is likely that future of Smartphone camera focuses on an ability to capture objects at a long distance.
        Samsung Electro-Mechanics started mass-production process of camera modules that implement 5X optical zoom. Optical zoom is a function that either expands or reduces an object by physically moving lenses. Unlike digital zoom that can produce images with poor quality when images are expanded through software, images made by optical zoom are very clear.
        Previously, 2X optical zoom was the highest optical zoom for a Smartphone camera. However, there have been products with higher optical zoom this year starting with Huawei that released a product with 5X optical zoom. Samsung Electro-Mechanics’ camera modules with 5X optical zoom will be supplied to OPPO.
        Optical zoom is implemented as lenses within a camera module move. Higher optical zoom is implemented as distance between an image sensor and a lens widens. However, this causes camera modules to be thicker and was not desirable for Smartphones that need to retain their slimness.
        Structure like a periscope is seen as a possible remedy. Unlike previous method that stacked lenses on top of each other, this structure solves thickness issue by bending light through prism and implements higher optical zoom. Samsung Electro-Mechanics’ new camera module and Huawei’s P30 Pro are also based on this structure.
        Although some Smartphone manufacturers are emphasizing that 10X optical zoom is possible by combining optical zoom and digital zoom, there is always going to be a gap between Smartphone camera’s zoom function and a normal camera’s zoom function. Because there is so much room for improvement, camera module businesses are looking to improve camera modules continuously.
        ◊Smartphone manufacturers looking to hide front camera on the back of a screen
        Front camera is also expected go through a change. Front camera is much needed as it is used often for selfies and video-calls. Recent trend has Smartphone manufacturers trying to maximize screens of their products. They are attempting to increase sense of immersion by filling entire front of a Smartphone with a screen. However, this causes an issue as a front camera requires space and this space needs to be removed to implement a full-screen.
        There are several solutions that are being developed to resolve this issue and one of them is hiding front-camera on the back of a display. Unlike a method that drills a hole on a display where a camera is located, this method even fills area where a camera lens is located with a screen. Samsung Electronics calls this method as ‘under panel camera’ method.
        It is not known how a camera that is located on the back of a screen will operate. However, there is a chance that an area where a lens is located will become transparent whenever a camera is used. This method however requires high-sensitive sensor and very thin camera as light penetrates display.
        It is heard that Samsung Electronics is working with Samsung Display to develop a technology that will hide a camera on the back of a screen.
        “Because there will be limited space for a front camera in order to meet consumers’ needs that prefer even wider displays, we are currently developing a technology that will hide a front camera on the back of a display.” said Director Kwon Jin-hyun of Samsung Electronics’ System LSI Business Department.
        Staff Reporter Jung, Hyunjung | iam@etnews.com & Staff Reporter Yun, Geonil | benyun@etnews.com

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