Samsung to Slash OLED Production Due to Weak iPhone X Sales

Samsung Electronics Co. will slash output of its organic light-emitting diode (OLED) panels in response to its customer Apple Inc's decision to cut production of iPhone X amid weak sales, the Nikkei reported on Tuesday.

Samsung Display, the panel-making unit of Samsung Electronics, now plans to make OLED panels for 20 million or fewer iPhones at the South Chungcheong plant in the January-March quarter, significantly lower than its initial goal of supplying panels for 45 million to 50 million iPhones.

The company has yet to decide its production target for the April-June period, but a further cutback may be in store.

The new target will reduce production at the plant to around 60 percent of the original plan. When it comes to the facility dedicated to making panels for Apple, the rate wil fall to 50 percent or lower.

The iPhone X has been the first phone to get a major design overhaul since the launch of the iPhone 6 in 2015, and many expected it to lead to blockbuster sales.

One problem is price. Samsung's panels cost more than $100 each. Though the iPhone X's OLED screen looks beautiful, it's much more expensive than the liquid crystal displays used in other phones, including the lower-end iPhone 8 Plus. That's relatively why the iPhone X costs $1,000 and why you won't find many other phones on the market at that price.

A related issue is that midrange smartphone manufacturers are avoiding adopting OLED screens because of their price, with makers reluctant to pass that cost on to consumers. Samsung is also facing more competition, with Chinese OLED makers able to offer the technology at a lower price.

Apple's lowered targets will probably hit Samsung's bottom line significantly too. The firm was expected to earn $4 billion more from the iPhone X than from making components for its own Galaxy S8 smartphone.

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