Samsung Sees Slow Demand for OLEDs Used for Apple’s iPhone X

Mark Gurman and Sam Kim, reporting for Bloomberg:

Samsung Electronics Co. is the latest Apple Inc. supplier to offer a sign of weaker iPhone X sales, saying that it’s seeing slow demand for the screens used in the flagship product.

The South Korean electronics manufacturer said in an earnings report today that profits for its display business “were affected by slow demand for flexible OLED panels.” The division’s sales rose 3.4 percent in the latest quarter, compared with 20 percent for Samsung as a whole.

Flexible OLED panels are the screens used inside the iPhone X, and those are supplied exclusively by Samsung. Other component makers for Apple, which reports quarterly earnings results next week, have also issued gloomy outlooks pointing to lackluster demand for the top-end phone.

Starting to sound like iPhone X sales really are falling short of expectations. You often can’t judge iPhone sales from the perspective of a component maker, because Apple could have switched to another company for the same component. But these flexible OLED displays only come from Samsung. Apple reports earnings for the first calendar quarter on Tuesday.

My spitball theory: the iPhone X is not “too expensive”, but it is too expensive for mass market casual phone buyers. iPhone sales always peak in the fourth calendar quarter by a large margin, for two reasons: (1) it’s the holiday quarter, so anyone buying an iPhone as a gift is going to buy it in November or December; and (2) that’s the first full quarter when new top-tier iPhones debut, and enthusiasts buy them as soon as they can. iPhone X sales were great in the holiday quarter, but perhaps the enthusiasm of the early adopter crowd isn’t shared by the mass market.

Perhaps I’m just stating the obvious here — the existence of the iPhone 8 and 8 Plus indicates that Apple anticipated the need for brand new high-end iPhones in the $700-800 price range. Assuming they keep going with the new $1000-1100 tier, those phones might be even more biased toward the holiday quarter than other iPhones.

Update: M.G. Siegler:

Good points, and the flip side of why the iPhones 8 didn’t sell as well out of the gate: the early-adopters/die-hard were waiting for X. In an ideal world, the releases would have been inverted (X first, 8 a couple months later).

Friday, 27 April 2018