Some more of our DD for your consideration, bear in mind this report is from 2012. Link is below, some very interesting info here.

4. The Basic Global Value Chain of Samsung Electronics

4.1. Basic Value Chain

Figure 6 illustrates that the Samsung value chain is based broadly on the Oracle value
chain for hi tech businesses, with the addition of logistics, which play such an important
role in a company of the size of Samsung Electronics. In this section the basic
framework of the Samsung value chain is presented so that the distinctiveness of the
mobile media value chain and the connected vehicle value chain can be readily
understood. This closely relates to how Canadian companies might seek to interface with
Samsung. There is also the spatial dimension since these activities do not take place in
the same space, but across the entire globe, although heavily concentrated in Korea,
China and Vietnam.

For Samsung, the activities of basic research, product development and design are a
primary activity, unlike Porter’s original value chain model that classified these as
support activities.

We therefore designate technology development and part of product development to the
first step of the value chain, prior to procurement and inbound logistics. This view of the
value chain potentially adds more value-added in this stage for connected vehicles, where
the business model is not yet established, than for mobile technology where Samsung is
already a global leader. As will be shown in the next section, Samsung has developed a
complex organization that can both develop new products and improve existing products.

4.2. Structure of the R&D Value Chain

Since the late 1990s, Samsung has progressively taken competitive leadership first in
memory chip design, then in LCD technologies and now mobile telephony so that it is
breaking new frontiers in product design and integrated technology at each stage. This is
recognised even by Apple’s I- product family, both in its purchase of components from
Samsung as the best, but not necessarily the cheapest available and its global legal
campaign against Samsung.

SEC has spent about US$7~10 billion per annum on R&D in recent years (about 7% of
gross earnings.)

For hi-tech companies, investment in technology development is a crucial part of value chain activities since hi tech products are changing rapidly. In case of Samsung, the total expenditure of R&D to sales in 2010 was 7%.

As a hi-tech company which produces various types of hi tech products in different segments (mobile media, semiconductors, home applications), Samsung has to consider that the designing process is one of the fundamental activities in creating value. Since hi tech products are changing rapidly, the rapid creation of designs are needed to compete in the global market.

5.2.2. The Mobile Media Value Chain

Mobile media is the fastest growing area of Samsung Electronics’ business, led by the
Galaxy smart phone. This report assumes that the legal issues between Apple and
Samsung which are interrupting the supply chains are settled and do not affect the longterm evolution of the company or its structure.

Overall, Samsung sold 280 million mobile phones in 2010, corresponding to a market
share of 20.2%. Shipments of smart phones increased 30% in Q4 2011 over the previous
quarter. The total value of the telecom and mobile media business to Samsung
Electronics in 2011 was KRW55.53 trillion (C$50.5 billion), with KRW8.27 trillion in
operating profit and an estimated KRW8 trillion in net profit before tax.

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