Samsung forced to slash OLED production due to poor iPhone X sales

iPhone X Retail Box

Samsung and Apple may be sworn enemies publicly, but the two are actually business partners behind the scenes for certain components of the iPhone. Case in point – the iPhone X’s OLED screen is made by the South Korean manufacturer.

One report even claimed that Samsung was set to earn $4 billion more on the iPhone X than its own Galaxy S8. Turns out, this may have been a touch too optimistic since a more recent Nikkei article says that the company is being forced to slash production of OLED panels for the handset.

It seems Apple has reduced output in the wake of weak demand for the iPhone X. Samsung Display was supposed to supply screens for 45 million to 50 million units in the January to March quarter. It’s now cut that down to 20 million or fewer panels.

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Things may get even worse in the April to June quarter, so that last number could fall even further. Samsung’s apparently scrambling to get more orders from Chinese OEMs to offset the potential loss. Even so, the company could suffer a year-on-year profit decline for the first half of 2018.

That’s because Samsung took a bit of a gamble with Apple. It expected a rise in demand, so it accordingly made a KRW 13.5 trillion (roughly $12.6 billion) capital investment in 2017. This in turn increased depreciation costs by KRW 1.5 trillion in 2018.

The situation might get better in the July to December period though, as some analysts believe that orders from Apple will recover by then. Samsung’s not the only one suffering from the alleged lack of iPhone X sales. Memory chip prices have gone down as well.