Samsung said to be cutting inventory reserves by half starting July

Rebecca Kuo, Taipei; Joseph Tsai, DIGITIMES [Friday 11 July 2008]

In order to counter the falling worldwide economy, Samsung Electronics reportedly will implement a new inventory management strategy aiming to cut reserves by around half in the second half this year, according to sources at Taiwan-based panel makers.

In the past, Samsung's handset, TV and PC inventories for the market in Korea were maintained at around 5-10 days, while overseas markets were around 2-3 months. But with the new strategy, handset inventories for the overseas market will be reduced to less than one month, and PC inventories for Korea will be changed to ship-to-order.

For its own panel business, Samsung's original panel inventories were held around 1.5 months, but starting July this will be reduced to around one month.

Samsung new inventory controls will affect its TV panel suppliers in Taiwan – AU Optronics (AUO) and Chi Mei Optoelectronics (CMO). AUO is reported to have had some LCD TV panel orders canceled, while the CMO's shipments to Samsung have not increased as originally expected, the sources revealed.