Lackluster iPhone X sales bad news for Samsung, iPhone Xs Plus may use LG OLED screens
Rumors that this quarter may see a precipitous drop in iPhone X shipments, after the initial adoption ran its course, are starting to pile up from multiple analyst and supply chain sources. The latest installment in the iPhone-X-doesn't-sell-well saga comes in the form of a report that Samsung has cut its OLED production significantly, and put the brakes on building a new display plant.
As we know, Samsung is currently the sole supplier of the iPhone X's 5.8" flexible OLED panels, at $70 a pop, and has been hoping to capitalize on Apple's new OLED models coming this year, too. Its A3 plant that makes the screens, though, has allegedly cut production rates by 10% in January, after operating at full capacity for years, and industry sources are blaming diminished iPhone X panel orders which present almost 80% of the screens churned out by the factory. "Samsung is reducing operation at the A3 plant largely due to the remaining inventories for the iPhone X," they claimed on the condition of anonymity.
All eyes are now on the February and March production rate reports, to gauge whether the interest in Apple's first OLED iPhone is indeed subsiding faster than previously forecast. Not only that, but Samsung is reportedly putting a big new OLED plant it started building in Vietnam on hold for now, as it's not exactly clear what the OLED iPhone strategy will be this year. A drop in Apple's orders will hit Samsung's earnings as well, just after it announced a record $14 billion profit forecast.
Apple, in its turn, is reportedly looking to diversify its panel supply away from Samsung. There is plenty of info that it may turn to Japan Display for a flexible 6.1" LCD panel to be outfitted on a more affordable iPhone 9 in this year's crop. Such a screen will allow it to fit a notch cutout and a TrueDepth camera kit at a much lower cost than by using Samsung's pricey OLED panels.
Furthermore, other industry sources tip that Apple has chosen LG to supply the larger, 6.46" OLED display of the rumored new iPhone Xs (or XI) Plus model that it is prepping for the fall, so Samsung may be left with only the orders for the iPhone X successor, it seems, which would explain the capital expenditures pause further. It won't explain the current production cuts, though, and analysts are no doubt very eager to hear Apple's revenue forecast for Q1 when it reports the Q4 results next week on February 1.
source: ETNews (translated) & The Investor
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