Sluggish Apple iPhone X sales hit Samsung

By Kim Yoo-chul

Samsung Electronics and Apple are entwined in an “extraordinary relationship” because the two technology giants are competing for the lion's share of the evolving mobile world.

Samsung Electronics, the world's top handset vendor by shipments, is hampering the Cupertino-based outfit with global releases of new products with an improved array of features and benefits while, in contrast, Apple is sticking to its philosophy of simplicity.

Adding to the “soap-opera-like” intrigue, Samsung Electronics is also a top-tier supplier to Apple with the latter procuring displays and chips to assemble “i-somethings.” Their love-hate relationship is becoming much more complicated due to the complex nature of the businesses they are involved in.

But this time, the sluggish sale of Apple's premium iPhone X is hurting the bottom line of Samsung's display business. The concern is Samsung has a whopping 97 percent global share in small- and mid-sized OLED displays and it is an exclusive OLED display panel supplier for Apple. That means Samsung's display business is in sync with the sales curve of the Apple iPhone X as this is the first Apple handset using a premium OLED panel.

“iPhone X sales failed to meet expectations. Disappointing iPhone X sales caused problems for Samsung's display business as it is attempting to find new clients for OLED displays due to a supply surplus,” said an official at Samsung, wishing to remain unidentified, Tuesday.

But it's not clear what the results are for those latest attempts to find new clients, though Samsung is suggesting it will supply its high-end OLED screens below market prices.

FN Guide, a financial data tracker, said Samsung Electronics is forecast to report 61.68 trillion won in revenue for the first quarter of this year with the company expecting to generate 14.58 trillion won in profits. That is down 6.5 percent and 3.7 percent from a quarter earlier, respectively.

“We are very confident the performance of Samsung's display business during the first quarter won't be good. We aren't very positive about the company's business outlook throughout this year,” said a senior hedge fund manager at a U.S.-based investment bank in Seoul, adding Samsung's OLED business is facing a major “crossing point.”

JPMorgan cut its outlook for iPhone X sales during the first half of this year by 44 percent. For the final quarter of last year, Samsung's display business reported 11.18 trillion won in revenue; however, market analysts say its display business is anticipated to earn about 8 trillion won in revenue in the current quarter.

OLED (organic light-emitting diode) has long been touted as the future of smartphones as the screen doesn't need a bulky backlight and has much crisper viewing and is easier on batteries than conventional LCD screens.