Given that Samsung and Apple have been locked in a fight to the death over the high-end smartphone market for the last decade, you’d think that iPhone X sales coming in below expectations would have the champagne bottles popping in Seoul.
But unfortunately for Samsung, the profitability of its OLED manufacturing plant relies on healthy sales of OLED smartphones, and there was no bigger customer lined up for 2018 than Apple and the iPhone X. According to a new report from Bloomberg, mediocre iPhone X sales are causing problems for Samsung’s display division.
“The iPhone X didn’t sell as well as Wall Street anticipated and Samsung, the top OLED supplier, expects to ship about half the units planned to Apple, according to people familiar with the situation,” Bloomberg reports.
The news that the iPhone X isn’t selling well is not new, but reducing iPhone X parts orders by 50% is much worse than we’ve previously heard. A report in January suggested that Samsung was cutting production by 10%, but that didn’t hint at a problem of this magnitude.
With the iPhone X no longer driving demand for Samsung, the natural expectation would be for the company to cut prices to compete with LCD screens, and for Chinese manufacturers to switch to OLED panels in their phones. According to analysts, that’s not happening. “The basic expectation has been that other vendors would seek to move to OLED based displays once capacity was available,” analyst Neil Campling said in a note seen by Bloomberg. But instead “the likes of Xiaomi, Oppo, Vivo and Huawei are clearly in no rush to shift to OLED.”
Poor iPhone X sales could also be a harbinger of something worse for Samsung. The company is counting on the Galaxy S9, which has an OLED panel, to prop up its display division for the rest of 2018. But if customers balked at the high price and lack of innovation seen in the iPhone X, it’s possible that the Galaxy S9 — which shares many of the same features — could similarly flop.