Samsung is reportedly getting ready to issue some $1 billion in bonds to expand production facilities. Meanwhile, it is starting to get a bit more specific with how it plans to use Tizen, a new mobile platform it is developing with Intel.
The moves in the last couple of days demonstrate that the company, which is currently the Android smartphone maker to beat, and nipping at Nokia’s heels as the world’s biggest mobile handset maker generally, is progressing in its attempts to look for new business opportunities.
These five-year bonds would be the first overseas bonds that Samsung has issued since 1997, writes Bloomberg, which confirmed the bond plans with Samsung. The bonds would be issued by the company’s U.S. unit and would be aimed at expanding the company’s production facility in Austin, Texas, which makes components that it could use in its own devices but also sells to other handset makers such as Apple (NSDQ: AAPL). It opened last October.
The move shows that despite some reports that Apple might turn to other component makers in the wake of legal scuffles between the two companies over mobile patents, Samsung is confident that this business will continue to remain strong in the years ahead, irrespective of that contract. At the moment, Samsung is the exclusive provider of A4 and A5 processing chips for Apple, which uses these in mobile devices such as the iPhone and iPad. It’s unclear what Apple’s business represents in terms of overall revenues for Samsung today. In Q1 2011, the figure was estimated to be around 5.8 percent of all of Samsung’s revenue.
In December 2011, Samsung reorganized its electronics business to make a stronger distinction between the division that makes components and the division that makes consumer mobile devices.
Tizen foot forward. Meanwhile, Samsung appears also to be laying out plans for what it might do next with its own devices business, specifically around the platform that it uses: it has confirmed that it is in the process of integrating its existing feature phone OS, bada, with Tizen, a new project Samsung is spearheading with Intel (NSDQ: INTC). It is partly based on MeeGo, Intel’s former stab at creating an OS with Nokia (NYSE: NOK) that was put to pasture when Nokia decided to pursue a mobile device future with Microsoft.
That should come as no surprise, given that both bada and Tizen are based on Linux and Samsung had always said that this would be the intention; however, now we have a bit more detail on how this might look in practice. According to an interview in Forbes, when the integration work is complete, developers’ bada applications will be supported in Tizen, and apps written for Tizen will still be able to work on bada devices.
Tae-Jin Kang, SVP of Samsung’s contents planning team, tells Forbes that Tizen will not become its main operating platform “anytime soon,” but that also begs the question of whether that is what Samsung ultimately hopes it can achieve. It could one day replace bada — or even, considering that it comes from the same roots as a previous smartphone OS, MeeGo, replace Android or Windows Phone in Samsung’s smartphone portfolio.
Or could it be used for both kinds of devices — say as a “lite” version for feature phones, and a heftier product for smart devices? That would potentially give Samsung greater control over its OS and, for a company spinning several plates at the moment, might point to a way of unifying its device strategy under a single platform. It would also give the company greater control, something that it does not have with Android, which is open-source but effectively developed and run by Google; (NSDQ: GOOG) and help Samsung better follow in the footsteps of Apple’s vertical-integration business model.
bada has proven to be a very popular platform where feature phones are concerned, and some analysts have taken to comparing it in the same category as smartphones. Gartner says that in Q3 2011, bada accounted for 2.2 percent (2.5 million units) of all smartphone sales, roughly double that of Windows Phone.
We should start seeing the first fruits of Samsung’s Tizen move soon: Kang says it will release two Tizen devices over the course of this year. Leaked pictures of what the OS will allegedly look like (one pictured here) emerged last week.