Samsung's OLED display is oversupply: a plan to cut investment
According to the financial times March 5th report, because Samsung OLED display's main user iPhone X sales is lower than expected, resulting in Samsung OLED display oversupply, production line start rate is only 50% to 60%. This situation will be improved after the release of new smartphones in June.
As the two most intense competition in the world of technology, Samsung and apple usually benefit from the other side's mistakes. However, the relationship has not been reflected in the latest generation of OLED screen display services for smartphones and tablets. The Samsung Group is now the main manufacturer of the OLED screen, and the latest Apple's latest smartphone, iPhone X, is a OLED screen. But the weak market sales after the release of iPhone X led to the problem of overcapacity in the OLED screen. As a result, Samsung could substantially reduce its investment in capacity for OLED displays. CLSA analyst in Seoul Sanjeev Rana (Sanjeev Rana) said, because Apple is expected to demand for OLED display screen is relatively large, Samsung had expanded to OLED display capacity investment. But iPhone X has been selling less than expected because of its high price. This means that the Samsung OLED display line will face a shortage of start in the first half of this year.
Unlike traditional LCD, because the OLED display consumes less energy, the use of the display will make the cell phone battery standby longer, without backlighting, higher resolution, thinner thickness and lighter weight. But the difficulty of many smartphone makers now is that the cost of products is high. The cost of each OLED screen in iPhone X is about $110 (about 697 yuan), which is more than two times the cost of the LCD display of the iPhone 8 configuration.
Lee Seung-woo, an analyst at Eugene Investment & Securities, an investment company, said iPhone X's sales slump led to a lack of start-up in Samsung OLED factory. According to his estimate, the Samsung OLED manufacturing plant has a current operating rate of only 50% to 60%. He said that this situation had a great impact on Samsung's financial performance. Samsung's display business profit in the fourth quarter of last year was 1 trillion and 400 billion won (about 8 billion 240 million yuan). Operating profits in the first quarter of this year are expected to be between 200 billion won (about 1 billion 170 million yuan) to 300 billion won (about 1 billion 760 million RMB).
Chung Won-seok, an analyst at HI Investment & Securities, predicts that the first quarter profits of Samsung Electronics display business will reach 700 billion won (about 4 billion 140 million yuan). He said that Samsung's dilemma is due to inadequate preparation for seasonal low demand. Considering that Samsung has high fixed costs, they should cooperate with other smart phone manufacturers instead of relying on apple only. But after the release of new smartphones in June, the oversupply of OLED displays will be improved.
