Samsung reports weak demand for OLED displays used in iPhone X
Samsung Electronics reported positive quarterly profits on Wednesday, its fourth consecutive period of massive record gains, but warned of slow growth due to weaker than expected demand for smartphone OLED panels like those supplied to Apple for iPhone X.
According to Reuters, Samsung noted weakness in the overall smartphone market would slow earnings growth in the coming months.
"Generating overall earnings growth across the company will be a challenge due to weakness in the display panel segment and a decline in profitability in the mobile business amid rising competition in the high-end segment," the company said.
Alongside an industry-leading smartphone business, Samsung supplies components to competitors, the most notable being Apple. For its 2017 iPhone lineup, the Cupertino tech giant relied solely on Samsung for OLED panels that wound up in iPhone X.
Extrapolating from Samsung's quarterly statement, soft demand in the panel segment could be a harbinger of slower than expected iPhone X sales. Apple's flagship iPhone is the first to use OLED, though at least two models predicted to launch this year will feature the display technology.
Previous reports also cast doubt on iPhone X performance. Without citing sources, Nikkei in January claimed Apple cut production in half due to slow sales, a situation reiterated in a follow-up report a month later. At the time, the publication said the purported poor showing prompted Samsung to shop its OLED screens to other customers.
The Nikkei reports seemingly fly in the face of comments made by Apple CEO Tim Cook, who in February said iPhone X outsold both iPhone 8 and 8 Plus since its ship date in November. It has been suggested that reports of Apple's order cuts, if legitimate, were due to common seasonality.
Today's statement from Samsung adds another wrinkle to the ongoing iPhone X narrative. Earlier this month, AMS, an Austrian firm that supplies components for Apple's TrueDepth camera, issued a short-term guidance report warning of lower than expected revenue in quarter two due to a reduction in production orders. A second partner manufacturer, A-series chip producer TSMC, revised its full-year revenue target down $1 billion due in part to a declining mobile market.
Whether Samsung's revelation provides insight into Apple's handset sales remains to be seen, though circumstantial evidence of a slowdown in iPhone X sales is mounting.
Apple will have the opportunity to clear the air next week when it reports earnings for its second fiscal quarter of 2018. Though the company does not traditionally break out sales on a per-model basis, it does provide detail on overall iPhone performance.
Looking ahead, Apple is rumored to debut three new iPhones this year, two of which are likely to boast OLED panels manufactured by Samsung. Apple is supposedly looking to diversify its OLED supply chain in 2018 by bringing LG into the fold, but reported manufacturing snags put the display maker's participation in doubt.
According to Reuters, Samsung noted weakness in the overall smartphone market would slow earnings growth in the coming months.
"Generating overall earnings growth across the company will be a challenge due to weakness in the display panel segment and a decline in profitability in the mobile business amid rising competition in the high-end segment," the company said.
Alongside an industry-leading smartphone business, Samsung supplies components to competitors, the most notable being Apple. For its 2017 iPhone lineup, the Cupertino tech giant relied solely on Samsung for OLED panels that wound up in iPhone X.
Extrapolating from Samsung's quarterly statement, soft demand in the panel segment could be a harbinger of slower than expected iPhone X sales. Apple's flagship iPhone is the first to use OLED, though at least two models predicted to launch this year will feature the display technology.
Previous reports also cast doubt on iPhone X performance. Without citing sources, Nikkei in January claimed Apple cut production in half due to slow sales, a situation reiterated in a follow-up report a month later. At the time, the publication said the purported poor showing prompted Samsung to shop its OLED screens to other customers.
The Nikkei reports seemingly fly in the face of comments made by Apple CEO Tim Cook, who in February said iPhone X outsold both iPhone 8 and 8 Plus since its ship date in November. It has been suggested that reports of Apple's order cuts, if legitimate, were due to common seasonality.
Today's statement from Samsung adds another wrinkle to the ongoing iPhone X narrative. Earlier this month, AMS, an Austrian firm that supplies components for Apple's TrueDepth camera, issued a short-term guidance report warning of lower than expected revenue in quarter two due to a reduction in production orders. A second partner manufacturer, A-series chip producer TSMC, revised its full-year revenue target down $1 billion due in part to a declining mobile market.
Whether Samsung's revelation provides insight into Apple's handset sales remains to be seen, though circumstantial evidence of a slowdown in iPhone X sales is mounting.
Apple will have the opportunity to clear the air next week when it reports earnings for its second fiscal quarter of 2018. Though the company does not traditionally break out sales on a per-model basis, it does provide detail on overall iPhone performance.
Looking ahead, Apple is rumored to debut three new iPhones this year, two of which are likely to boast OLED panels manufactured by Samsung. Apple is supposedly looking to diversify its OLED supply chain in 2018 by bringing LG into the fold, but reported manufacturing snags put the display maker's participation in doubt.
Comments
For the price of high quality OLED, Apple should stick to LCD and Micro LED.
I'd have to agree. Extrapolating the statement to say slow iPhone X sales is a stretch (which is exactly what extrapolating is, though!!). What percentage of the total OLED screens manufactured are for the X? How many other companies buy the screens?
Samsung said that smartphone sales in general will be soft. Why are we singling out the X?
In in any case there is not enough information here to gauge whether the weakening in demand for Samsung’s OLED panels is because of the iPhoneX, since Samsung makes OLED panels for their phones and panels for monitors and TV sets.
As an ultra-premium phone for an ultra premium market, by definition, most potential customers are priced out from the start. This should surprise no one. It isn't a problem as long as there are phones available to all potential users and the X sells in large enough numbers to make it worthwhile. From September last year, that is now largely the case for the first point. If they've sold a few million of the X the second case is justified too.
What doesn't help is all the defensiveness around iPhone X sales. Some people here were counting their eggs before they hatched on one earnings call, pulling on their bell ropes proclaiming the X as a major success. Nobody rates the success of a company or phone on the back of just one quarter, much less when it is the company's strongest quarter of the year. We should be evaluating its success around November.
Now, six months into the product cycle, another completely logical problem comes into play. If you had the money for an iPhone, you probably already have one. If you can afford one, but at a stretch, do you buy now or hold off until September? The only logical direction iPhone X sales should go, as a result, is down, but you were already selling to a fragment of your potential user base at the outset so the potential drop could be more marked.
There is zero to worry about in that case (at least in iPhone X terms).
The rest of the line of is bit of a mystery.
All of Apple's current phones have been overtaken in many areas (even the iPhone X). Having just one major release cycle complicates things as Apple cannot react to market tendencies nearly as quickly. Hence the current situation. Virtually the entire industry has moved to 'full screen' phones on newest offerings while Apple just has one and it's the most expensive one.
As phones draw level on major feature parity, things like design and price take on more importance. Apple is at a distinct disadvantage here. Unable to compete on price/design/dynamism.
There is definitely a case to be argued for for two major releases a year.
On the stock front, I simply don't understand all the fretting. If you buy Apple (at current prices) as a short term investment, it is a foolish move if you jump in fright at every dip. If you buy as a long term investment, why worry about these (well documented) fluctuations in the first place? If you think Apple has legs for the long term, just sit back and relax.
What it reported was that its entire Display Panels segment was down, and it specifically highlighted problems with both OLED and LED running into competitive pressures.
The only reason OLED was pulled out here was to create a BS story that could be laid on iPhone X.
Also, Samsung doesn't just sell chips and displays for phones.
My iPhone 7 Plus has a great screen. I don't think I need OLED.
If I really do... why, Apple?
Would the $200 be better spent elsewhere in my financially-deprived life?
BTW, oh yeah, I'm an Apple Guy... but, just sayin'....