Waning iPhone X demand forces Samsung to halve its OLED panel production
It seems the demand for the iPhone X has worn off earlier than expected. Now Apple plans to halve the production of the device which will negatively impact the Samsung display business as Samsung is the only supplier of the OLED panels for the iPhone X. Samsung will make only up to 20 million iPhone X OLED panels in the January-to-March quarter, which is 50 percent less the initial projection. A further reduction is also imminent.
When the bezel-less iPhone X launched last year it was expected to sell like hotcakes considering it came with a major design overhaul since the launch of the iPhone 6 in 2015. It opened well during the holiday season, but since then sales have slowed down so much that Apple decided to reduce the production of the device by half.
This has led to affect the Samsung display business as the company has now decided to cut down its OLED panel productions in response to Apple's decision of scaling down the order for OLED panels. Samsung is the sole supplier of OLED panels for the iPhone X.
Samsung plans to make a maximum of 20 million iPhone X OLED panels which is a significant drop from the initial goal of producing 45 to 50 million iPhone panels. This will create a 50 percent drop for the iPhone X OLED panel production and a 60 percent drop in overall production for the company.
While the production of 20 million OLED units is estimated for the January-to-March quarter, the estimation for the April-to-June quarter is yet to be set. However, further cut down is on the card. Expecting a skyrocketing demand for iPhone X OLED panels, Samsung had pumped in KRW 13.5 trillion which is about PHP 654 billion to its display business. But due to the lackluster performance of the iPhone X, Samsung is now left with the oversupply of OLED panels which they might sell to other customers such as several OEMs in China.
The oversupply of OLED panels was also due to the fact that Samsung had anticipated a trend of shifting to OLED panels to catch on among various OEMs after the iPhone X but that doesn't seem to be happening. Most of the smartphone manufacturers have preferred to stick with LCD panels for the obvious reason that OLED panels are costlier. Though the OLED panel has allowed Apple to cut down bezels and effect necessary frontal design changes in the iPhone X, the latter has ended up being expensive at USD 999 (approx. PHP 51,800), a reason which has apparently driven off buyers.
Nevertheless, experts believe that OLED panel orders will increase for Samsung as Apple is rumored to be prepping three different sized iPhones for 2018. Out of them, two will pack OLED panels, thereby increasing the demand for Samsung despite the fact that this time around Apple will also source OLED panels from LG Displays.
- Images from apple.com