Apple's largest supplier reported 24 percent surge in revenues from OLED display, componen...

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in iPhone
Apple's largest supplier-- and the primary source of the flexible OLED panels used in iPhone X and the new iPhone XS lineup-- reported 24 percent year-over-year growth in its Q3 revenues from its semiconductors, memory, and display panel unit, an increase it attributed to "increasing demand for flexible [OLED] panels." That supplier was Samsung, and the "major customers" it credited clearly included the world's largest seller of high-end OLED phones. Why aren't Samsung's results attributed to being an "iPhone supplier"?


Samsung supplied the high-end, flexible OLED panels used by iPhone X

Supply chain thunder only happens when it's raining

In April, Bloomberg was eager and quick to associate slow Q1 growth in Samsung's OLED unit to an imagined problem of "weak" sales of Apple's iPhone X. That was clearly not true.

Writing for Bloomberg, Mark Gurman carefully avoided any mention of the fact that Samsung itself had reported that its Display Panel sales were facing intense competition from other suppliers of commodity rigid OLED and conventional LCD screens. Samsung actually stated at the time that "demand for flexible panels remains strong in the high-end segment," a clear reference to Apple, the world's largest supplier of a high-end phone featuring a flexible OLED panel.

Across Q2, Samsung's revenues from its "Device Solutions" unit that builds Semiconductor components and Display Panels were up by 25 percent, while its sales of finished goods were down. Its "Internet and Mobile" group performed the worst, with IM Mobile sales (including Galaxy phones, tablets, and PCs) turning in a 22 percent revenue decline that dragged down the performance of the entire company.

In the most recent Q3, Samsung again turned in solid 24 percent growth in component sales, specifically noting "growing [OLED] sales led primarily by increasing demand for flexible panels," that resulted in "solid earnings on the back of [OLED] demand from major customers."

Suddenly, the OLED supplier's association with iPhones vanished.


Samsung's DS components business is up, while its IM product sales are down


While Samsung's component sales performed well, finished good sales from one of its largest component customers did not. Samsung's own IM Mobile unit turned in another 12 percent decline in YoY sales, and profits from IM Mobile declined by more than 32 percent. That leaves one other "major customer" responsible for selling that many of Samsung's flexible OLEDs -- Apple.

Smartphone estimates for Q3 from Gartner indicate that Samsung's sales fell by 14 percent YoY, by far the worst performance across the top five smartphone makers. It was "the largest year-over-year decline since Gartner began tracking smartphone sales globally."

Apple's iPhone sales remained flat YoY, but its product mix shifted from sales of one OLED phone with the launch of two new iPhone XS flagships. If demand were weak for Apple's new high-end OLED iPhones, surely it would be evident in Samsung's OLED sales-- the most expensive component of the new models-- rather than just a few minor component suppliers who get most of their business elsewhere-- including Samsung's poorly performing IM Mobile group suffering from a chronic, devastating decline in sales that's persisted across 2018.


Samsung cited demand for flexible OLED panels, which are being driven by Apple


The world's other leading phone makers, Huawei, Xiaomi, and Oppo, get most of their display panels from other suppliers, including BOE and LG. Apple is also reportedly sourcing OLED panels from LG as an alternative to Samsung beginning this quarter. Further, sales of iPhone XR, Apple's first Face ID model to not use an OLED panel, began at the very end of October. That means the business holding up Samsung's OLED growth is likely to begin slipping over the next year.

But right now, Samsung's component business is outpacing the growth of the rest of the company while its smartphone-centric IM Mobile group is dragging. The only explanation is that it continues to benefit from a solid customer with strong sales, and Apple is by far the primary driver of the high-end, flexible OLED panels that Samsung credits for its component sales success.
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Comments

  • Reply 1 of 25
    This actually fits nicely with the rumor Apple is restarting production of the X because it has a glut of OLED panels it was obligated to purchase from Samsung.  If that rumor is true and Samsung had a guaranteed minimum number of panels Apple agreed to acquire then any slowdown in OLED iPhone sales wouldn't affect its revenue in an unanticipated  major negative way.  You wouldn't see the effects on Samsung's revenue until the after the contract was up for renewal as Apple couldn't cut it's order mid-cycle like it can with smaller suppliers.
    edited December 4 muthuk_vanalingamgatorguy
  • Reply 2 of 25
    eideardeideard Posts: 357member
    And rumors are so important, eh?
    watto_cobra
  • Reply 3 of 25
    Awaiting this postive supply chain news spread like wildfire and have ‘analysts’ upgrade their stock expectations. /s
    andrewj5790dedgeckoDon.Andersenjony0watto_cobra
  • Reply 4 of 25
    78Bandit said:
    This actually fits nicely with the rumor Apple is restarting production of the X because it has a glut of OLED panels it was obligated to purchase from Samsung.  If that rumor is true and Samsung had a guaranteed minimum number of panels Apple agreed to acquire then any slowdown in OLED iPhone sales wouldn't affect its revenue in an unanticipated  major negative way.  You wouldn't see the effects on Samsung's revenue until the after the contract was up for renewal as Apple couldn't cut it's order mid-cycle like it can with smaller suppliers.
    Rampant speculation based on "maybe this could be happening" guesswork is called conspiracy theory. It's easy to construct a narrative where parts of the story are designed to fit together with other rumors or conjecture.

    It's not news or reality though.

    It's not even clear that Apple ever stopped production of iPhone X. It only stopped selling it in the USA, to focus on its new models. In some other countries, it continued to be sold, the same way Apple kept selling the 6 long after ending its sales in USA.

    When the same sources claim that Samsung was selling few OLEDs because iPhone X demand was weak come back in 6 months and say Apple had minimum quotas that are keeping Samsung afloat because iPhone demand is weak, that should tip you off that they are lying to promote a perpetual narrative that iPhone sales are weak, which is the opposite of every real point of data we have.

    iPhones are selling for $800 next to $200 Androids, and sales figures were slightly up this year in a market where smartphones are shrinking. It's totally asinine to be creating new possible stories to explain how Apple is in a desperately bad position and that nobody wants iPhones. 

     
    jony0gilly33
  • Reply 5 of 25
    So are we supposed to read into supply chain reports or not? I thought Tim Cook said not to.
  • Reply 6 of 25
    lkrupplkrupp Posts: 6,526member
    Put two and two together and it becomes very clear that analysts and Wall Street are coordinating a rumor campaign against Apple to take the stock down. There was an orgasm of superlatives when Microsoft very briefly exceeded Apple in market capitalization. The supply chain rumors keep on coming, but only negative ones with respect to Apple. Sitting here watching this happen it’s as plain as the nose on your face.
    Don.AndersenStrangeDaysjony0gilly33
  • Reply 7 of 25
    78Bandit said:
    This actually fits nicely with the rumor Apple is restarting production of the X because it has a glut of OLED panels it was obligated to purchase from Samsung.  If that rumor is true and Samsung had a guaranteed minimum number of panels Apple agreed to acquire then any slowdown in OLED iPhone sales wouldn't affect its revenue in an unanticipated  major negative way.  You wouldn't see the effects on Samsung's revenue until the after the contract was up for renewal as Apple couldn't cut it's order mid-cycle like it can with smaller suppliers.
    Rampant speculation based on "maybe this could be happening" guesswork is called conspiracy theory. It's easy to construct a narrative where parts of the story are designed to fit together with other rumors or conjecture.

    It's not news or reality though.

    It's not even clear that Apple ever stopped production of iPhone X. It only stopped selling it in the USA, to focus on its new models. In some other countries, it continued to be sold, the same way Apple kept selling the 6 long after ending its sales in USA.

    When the same sources claim that Samsung was selling few OLEDs because iPhone X demand was weak come back in 6 months and say Apple had minimum quotas that are keeping Samsung afloat because iPhone demand is weak, that should tip you off that they are lying to promote a perpetual narrative that iPhone sales are weak, which is the opposite of every real point of data we have.

    iPhones are selling for $800 next to $200 Androids, and sales figures were slightly up this year in a market where smartphones are shrinking. It's totally asinine to be creating new possible stories to explain how Apple is in a desperately bad position and that nobody wants iPhones. 

     
    From  the article:  "The only explanation is that it continues to benefit from a solid customer with strong sales, and Apple is by far the primary driver of the high-end, flexible OLED panels that Samsung credits for its component sales success."

    I was simply pointing out that there is another possible explanation that has already been brought up that would call into question the assertion that Apple must have strong sales for Samsung's revenue to be what it is.  Yes, it is speculation, but no more so than this article either.

    Is it any less of a conspiracy theory to say "Samsung's sales are strong, therefore Apple's sales must be strong too"?  It is still a "maybe this could be happening" guesswork that takes particular facts and uses them to fit a predetermined narrative.
    edited December 4 muthuk_vanalingamgatorguy
  • Reply 8 of 25
    So are we supposed to read into supply chain reports or not? I thought Tim Cook said not to.
    This is not an interpretation of a supply chain rumor. But you knew that, you're just here to waste people's time. 
    dedgeckoStrangeDaysjony0bestkeptsecretgilly33watto_cobra
  • Reply 9 of 25
    78Bandit said:
    78Bandit said:
    This actually fits nicely with the rumor Apple is restarting production of the X because it has a glut of OLED panels it was obligated to purchase from Samsung.  If that rumor is true and Samsung had a guaranteed minimum number of panels Apple agreed to acquire then any slowdown in OLED iPhone sales wouldn't affect its revenue in an unanticipated  major negative way.  You wouldn't see the effects on Samsung's revenue until the after the contract was up for renewal as Apple couldn't cut it's order mid-cycle like it can with smaller suppliers.
    Rampant speculation based on "maybe this could be happening" guesswork is called conspiracy theory. It's easy to construct a narrative where parts of the story are designed to fit together with other rumors or conjecture.

    It's not news or reality though.

    It's not even clear that Apple ever stopped production of iPhone X. It only stopped selling it in the USA, to focus on its new models. In some other countries, it continued to be sold, the same way Apple kept selling the 6 long after ending its sales in USA.

    When the same sources claim that Samsung was selling few OLEDs because iPhone X demand was weak come back in 6 months and say Apple had minimum quotas that are keeping Samsung afloat because iPhone demand is weak, that should tip you off that they are lying to promote a perpetual narrative that iPhone sales are weak, which is the opposite of every real point of data we have.

    iPhones are selling for $800 next to $200 Androids, and sales figures were slightly up this year in a market where smartphones are shrinking. It's totally asinine to be creating new possible stories to explain how Apple is in a desperately bad position and that nobody wants iPhones. 

     
    From  the article:  "The only explanation is that it continues to benefit from a solid customer with strong sales, and Apple is by far the primary driver of the high-end, flexible OLED panels that Samsung credits for its component sales success."

    I was simply pointing out that there is another possible explanation that has already been brought up that would call into question the assertion that Apple must have strong sales for Samsung's revenue to be what it is.  Yes, it is speculation, but no more so than this article either.

    Is it any less of a conspiracy theory to say "Samsung's sales are strong, therefore Apple's sales must be strong too"?  It is still a "maybe this could be happening" guesswork that takes particular facts and uses them to fit a predetermined narrative.
    none of the things you said are based on any verifiable facts. 

    On the other hand, we do know where high end flexible OLED panels come from, and we do know where they are sold in commercially significant quantities. There is no "maybe" conjecture. 
    jony0gilly33watto_cobra
  • Reply 10 of 25
    78Bandit said:
    78Bandit said:
    This actually fits nicely with the rumor Apple is restarting production of the X because it has a glut of OLED panels it was obligated to purchase from Samsung.  If that rumor is true and Samsung had a guaranteed minimum number of panels Apple agreed to acquire then any slowdown in OLED iPhone sales wouldn't affect its revenue in an unanticipated  major negative way.  You wouldn't see the effects on Samsung's revenue until the after the contract was up for renewal as Apple couldn't cut it's order mid-cycle like it can with smaller suppliers.
    Rampant speculation based on "maybe this could be happening" guesswork is called conspiracy theory. It's easy to construct a narrative where parts of the story are designed to fit together with other rumors or conjecture.

    It's not news or reality though.

    It's not even clear that Apple ever stopped production of iPhone X. It only stopped selling it in the USA, to focus on its new models. In some other countries, it continued to be sold, the same way Apple kept selling the 6 long after ending its sales in USA.

    When the same sources claim that Samsung was selling few OLEDs because iPhone X demand was weak come back in 6 months and say Apple had minimum quotas that are keeping Samsung afloat because iPhone demand is weak, that should tip you off that they are lying to promote a perpetual narrative that iPhone sales are weak, which is the opposite of every real point of data we have.

    iPhones are selling for $800 next to $200 Androids, and sales figures were slightly up this year in a market where smartphones are shrinking. It's totally asinine to be creating new possible stories to explain how Apple is in a desperately bad position and that nobody wants iPhones. 

     
    From  the article:  "The only explanation is that it continues to benefit from a solid customer with strong sales, and Apple is by far the primary driver of the high-end, flexible OLED panels that Samsung credits for its component sales success."

    I was simply pointing out that there is another possible explanation that has already been brought up that would call into question the assertion that Apple must have strong sales for Samsung's revenue to be what it is.  Yes, it is speculation, but no more so than this article either.

    Is it any less of a conspiracy theory to say "Samsung's sales are strong, therefore Apple's sales must be strong too"?  It is still a "maybe this could be happening" guesswork that takes particular facts and uses them to fit a predetermined narrative.
    none of the things you said are based on any verifiable facts. 

    On the other hand, we do know where high end flexible OLED panels come from, and we do know where they are sold in commercially significant quantities. There is no "maybe" conjecture. 
    The verifiable facts are multiple suppliers of iPhone components have issued revenue guidance warnings lately.  It is no less speculative to attribute that to iPhone sales woes than it is to attribute Samsung's good revenue to positive iPhone sales.  Neither Samsung nor the other suppliers have gone on record as to exactly what Apple's orders are, so any assumptions based on overall results/warnings are pure speculation on either side.

    We know where face ID cameras come from (Lumentum which counts on apple for 30% of its revenue), that supplier issued a warning.
    We know where the audio chips come from (Cirrus which counts on Apple for 80% of its revenues), that supplier issued a warning.

    These are not insignificant quantities of components provided to Apple.

    Apple could be having poor iPhone sales or it could be having record iPhone sales, and there is verifiable information that can be used to form an opinion either way.
    edited December 4 muthuk_vanalingamgatorguy
  • Reply 11 of 25
    maestro64maestro64 Posts: 4,336member
    78Bandit said:
    This actually fits nicely with the rumor Apple is restarting production of the X because it has a glut of OLED panels it was obligated to purchase from Samsung.  If that rumor is true and Samsung had a guaranteed minimum number of panels Apple agreed to acquire then any slowdown in OLED iPhone sales wouldn't affect its revenue in an unanticipated  major negative way.  You wouldn't see the effects on Samsung's revenue until the after the contract was up for renewal as Apple couldn't cut it's order mid-cycle like it can with smaller suppliers.
    I working in supply chains in high tech companies and I can tell you this did not happen. First, I do not believe Apple would ever agree to MOQ on any parts, even if they somehow agreed to this without knowing they could not hit it, this would have been negotiated away with the next product they sourced from Samsung. I never seen a situation where a company was force to take product which was not already made. Apple would not have allowed Samsung to continue producing parts knowing full well they plan to do something different in the future. So this does not pass the smell test. 
    ericthehalfbeeRayz2016StrangeDayscorrections
  • Reply 12 of 25
    maestro64maestro64 Posts: 4,336member
    78Bandit said:
    78Bandit said:
    78Bandit said:
    This actually fits nicely with the rumor Apple is restarting production of the X because it has a glut of OLED panels it was obligated to purchase from Samsung.  If that rumor is true and Samsung had a guaranteed minimum number of panels Apple agreed to acquire then any slowdown in OLED iPhone sales wouldn't affect its revenue in an unanticipated  major negative way.  You wouldn't see the effects on Samsung's revenue until the after the contract was up for renewal as Apple couldn't cut it's order mid-cycle like it can with smaller suppliers.
    Rampant speculation based on "maybe this could be happening" guesswork is called conspiracy theory. It's easy to construct a narrative where parts of the story are designed to fit together with other rumors or conjecture.

    It's not news or reality though.

    It's not even clear that Apple ever stopped production of iPhone X. It only stopped selling it in the USA, to focus on its new models. In some other countries, it continued to be sold, the same way Apple kept selling the 6 long after ending its sales in USA.

    When the same sources claim that Samsung was selling few OLEDs because iPhone X demand was weak come back in 6 months and say Apple had minimum quotas that are keeping Samsung afloat because iPhone demand is weak, that should tip you off that they are lying to promote a perpetual narrative that iPhone sales are weak, which is the opposite of every real point of data we have.

    iPhones are selling for $800 next to $200 Androids, and sales figures were slightly up this year in a market where smartphones are shrinking. It's totally asinine to be creating new possible stories to explain how Apple is in a desperately bad position and that nobody wants iPhones. 

     
    From  the article:  "The only explanation is that it continues to benefit from a solid customer with strong sales, and Apple is by far the primary driver of the high-end, flexible OLED panels that Samsung credits for its component sales success."

    I was simply pointing out that there is another possible explanation that has already been brought up that would call into question the assertion that Apple must have strong sales for Samsung's revenue to be what it is.  Yes, it is speculation, but no more so than this article either.

    Is it any less of a conspiracy theory to say "Samsung's sales are strong, therefore Apple's sales must be strong too"?  It is still a "maybe this could be happening" guesswork that takes particular facts and uses them to fit a predetermined narrative.
    none of the things you said are based on any verifiable facts. 

    On the other hand, we do know where high end flexible OLED panels come from, and we do know where they are sold in commercially significant quantities. There is no "maybe" conjecture. 
    The verifiable facts are multiple suppliers of iPhone components have issued revenue guidance warnings lately.  It is no less speculative to attribute that to iPhone sales woes than it is to attribute Samsung's good revenue to positive iPhone sales.  Neither Samsung nor the other suppliers have gone on record as to exactly what Apple's orders are, so any assumptions based on overall results/warnings are pure speculation on either side.

    We know where face ID cameras come from (Lumentum which counts on apple for 30% of its revenue), that supplier issued a warning.
    We know where the audio chips come from (Cirrus which counts on Apple for 80% of its revenues), that supplier issued a warning.

    These are not insignificant quantities of components provided to Apple.

    Apple could be having poor iPhone sales or it could be having record iPhone sales, and there is verifiable information that can be used to form an opinion either way.
    Actually we do not know that. Lumentum waring could be them just finding out now they loss some or all of the Apple business. Apple could have move a portion or all of the Face ID silicon to another supplier Lumentum found out when the new products launched and they did not see the increase orders as they expect. Apple had a long track record and is well known in the industries for not telling suppliers what they are doing. They usually find out after the fact. 

    We also know that Apple has complicated supply chain, and there is no was of know if why one supplier business is going up or down since Apple could be normal moving business around and also trying to mitigate supply chain risks which you would have not idea what those could be.

    Lastly, last year Apple had 1 product which uses these parts, this year they introduced 5, do you really believe the volume on 5 product is going to so much worse that is falling well below a single product last year to the point that a supplier had to put our a earning warning so bad if they were truly the sole source the face ID silicon. This is where critical thinking and problem solving needs to kick in.
    jony0gilly33corrections
  • Reply 13 of 25
    clarker99 said:
    Awaiting this postive supply chain news spread like wildfire and have ‘analysts’ upgrade their stock expectations. /s
    And then buy Apple....we know what this analyst are doing. They spread bad rumors and stocks goes down, then thier cahoots buys. Good news comes and they smell good to investors. Sounds like manipulation to me...
    watto_cobra
  • Reply 14 of 25
    maestro64 said:
    78Bandit said:
    This actually fits nicely with the rumor Apple is restarting production of the X because it has a glut of OLED panels it was obligated to purchase from Samsung.  If that rumor is true and Samsung had a guaranteed minimum number of panels Apple agreed to acquire then any slowdown in OLED iPhone sales wouldn't affect its revenue in an unanticipated  major negative way.  You wouldn't see the effects on Samsung's revenue until the after the contract was up for renewal as Apple couldn't cut it's order mid-cycle like it can with smaller suppliers.
    I working in supply chains in high tech companies and I can tell you this did not happen. First, I do not believe Apple would ever agree to MOQ on any parts, even if they somehow agreed to this without knowing they could not hit it, this would have been negotiated away with the next product they sourced from Samsung. I never seen a situation where a company was force to take product which was not already made. Apple would not have allowed Samsung to continue producing parts knowing full well they plan to do something different in the future. So this does not pass the smell test. 

    This. Further, I find it ridiculous that Apple (with Tim Cook - master of the supply chain) could ever be so wrong about supply/demand that they would find themselves in a situation where they had a large surplus of any component.
    StrangeDaysjony0watto_cobra
  • Reply 15 of 25
    78Bandit said:
    This actually fits nicely with the rumor Apple is restarting production of the X because it has a glut of OLED panels it was obligated to purchase from Samsung.  If that rumor is true and Samsung had a guaranteed minimum number of panels Apple agreed to acquire then any slowdown in OLED iPhone sales wouldn't affect its revenue in an unanticipated  major negative way.  You wouldn't see the effects on Samsung's revenue until the after the contract was up for renewal as Apple couldn't cut it's order mid-cycle like it can with smaller suppliers.
    There are two really interesting notes to this article. The first, is that other suppliers are showing a slow down in the component purchasing allegedly from Apple, this is not necessarily indicated through Sam songs OLED sales.
    Second, if Apple has a contract to purchase a certain amount of OLED screens, they could still buy them for future phones to fulfill their contract.

    Something else that’s very interesting, when Samsung has to cut their future screen sales forecasts due to LG selling OLED to Apple, will the industry claim and doom and gloom on iPhone sales it again…
    gilly33watto_cobra
  • Reply 16 of 25
    jungmarkjungmark Posts: 6,569member
    It’s obvious only Apple cuts production from suppliers. Any gains are from other customers. Don’t fall for the trap of believing Apple knows what’s it’s doing. They’ve been beleaguered for almost 25 years for a reason!

    /s
    Don.Andersenjony0watto_cobra
  • Reply 17 of 25
    We also know that Apple invested in FINISAR for VCSELs, we know that FINISAR reported increase in revenues this last quarter.

    I could put two and two together and believe that Finisar just drank Lumentum’s milkshake, but no, that can’t be it. 
    Don.Andersenjony0watto_cobra
  • Reply 18 of 25
    So are we supposed to read into supply chain reports or not? I thought Tim Cook said not to.
    Again, the point is lost on your due to your irrational hate of DED and his continued use of reason. It's quite clear -- if the supply chain rumors are to be trusted when the news is bad, should they not also be trusted when the news is good? Pointing out the hypocrisy is the point. Pointing out that Bloomberg and others are peddling a manipulative narrative is the point. 

    It seems like work to continually not get what DED writes, every. single. column.
    edited December 4 jony0gilly33correctionswatto_cobra
  • Reply 19 of 25
    Apple's largest supplier-- and the primary source of the flexible OLED panels used in iPhone X and the new iPhone XS lineup-- reported 24 percent year-over-year growth in its Q3 revenues from its semiconductors, memory, and display panel unit, an increase it attributed to "increasing demand for flexible [OLED] panels." That supplier was Samsung, and the "major customers" it credited clearly included the world's largest seller of high-end OLED phones. Why aren't Samsung's results attributed to being an "iPhone supplier"?...

    ...In April, Bloomberg was eager and quick to associate slow Q1 growth in Samsung's OLED unit to an imagined problem of "weak" sales of Apple's iPhone X. That was clearly not true.


    Samsung's Q3 year to date DP (display) sales are unchanged from 2017 to 2018 at 23.3. While Q3 2018 was higher than Q3 2017 the Q2 2018 was much lower than Q2 2017 and they offset each other.

    If the increase in Q3 2018 sales is because of Apple increasing orders then it makes sense that the Q2 2018 drop is due to Apple reducing orders, and Apple did stop making the iPhone X so that makes sense.

    That DP revenue has not increased year to year even though Apple introduced two OLED phones this year to only one last year and those phones have bigger screens indicates that the number of screen ordered has fallen year to year as well.



    Those other much smaller Apple suppliers surely would have been happier to have not announced lowered Q3 guidance. It's doubtful Bloomberg made them do it.

    The high end smartphone market is mature and sales aren't going to continue to go up as steeply every year.
    gatorguymuthuk_vanalingam
  • Reply 20 of 25
    Daniel Eran Dilger out there in full force again. You can always tell when Apple is in trouble when DED comes out with an apology piece with poorly researched nonsense.
    edited December 4 avon b7muthuk_vanalingam
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