Sales of the iPhone X are weaker than expected, hurting both Apple and Samsung.
Samsung is to dramatically cut production at its organic light emitting diode (OLED) panel manufacturing plant in response to Apple’s decision to reduce iPhone X output due to a lack of interest.
According to the Nikkei Asian Review, Samsung now plans to make OLED panels for 20m or fewer iPhones in the first quarter of this year. This is a dramatic decrease from the initial OLED supply goal of 45 to 50m devices earmarked before Apple changed production targets.
Apple sees weakened demand for iPhone X
Unfortunately for Samsung, it is proving tough to shift the leftover OLED display panels that were originally intended for use in the iPhone X.
The South Korean giant had been hoping that other smartphone manufacturers would be swift in taking the components off its hands, but OLED displays are significantly more expensive than the LCD displays used in the majority of smartphone models. The higher price point of the iPhone X can be partially attributed to the inclusion of the OLED display panel in the premium offering from Apple.
Major markets in the US, China and Europe are being blamed for sluggish iPhone X sales after an initial spike in interest after the launch of the phone in November 2017. The sales of the phone still run in the millions, but have certainly stagnated in recent months.
Samsung facing tough opposition
Samsung is also facing competition from Chinese manufacturers of OLED panels that can undercut the company on price. Apparently, Apple was paying Samsung between $120 and $130 per display, so the company could face significant problems if the units are not shifted.
Samsung’s display arm is set to see a year-on-year profit decline for the first half of the year, as the company had made a $12.6bn capital investment last year, anticipating major consumer interest in the iPhone X.
It may not all be bad news, though, as analysts say Apple orders for its flagship phone could recover in the July-December period of 2018. While the predicted flurry of upgrades simply didn’t happen post-launch, there is still potential for the latter half of the year.
Memory chip prices are also taking a hit due to the lacklustre results for Apple’s premium smartphone model.