iPhone X production cut will also hurt Samsung’s OLED display business

The beast of the decade, Apple’s 10th-anniversary flagship, iPhone X isn’t as unique as it is being portrayed. Yes, Apple borrowed displays from Samsung. As Apple decided to shake hands with Samsung, to provide OLED displays for iPhone X. And Samsung made it happen, meeting all the production requirements of the Cupertino giant. A single OLED display along with touch sensors for iPhone X costs $100, maybe that’s the reason that the total cost of the phone went as high as $1,000.

Anyhow, the new development that brought us here to reopen this closed case is a new report by a Japanese media outlet Nikkei. The report says that Samsung will also get hurt if Apple decides to cut the production of iPhone X. Nikkei Asian Review is deemed to be an expert in providing accurate information on the supply chain.

The report claims that Samsung enhanced its capacity of production of OLED display panels, considering the amount of business, it was supposed to get after making deal with Apple. The only Apple smartphone that is featuring an OLED display is iPhone X, the rest of the models like iPhone 8 and iPhone 8 Plus have an LCD display panel which is again made by Samsung Display. As of now, the rumors about the discontinuation of iPhone X have started catching more heat and the company is planning to boost its production and sales with a newer 6.1-inch LCD iPhone. This means that Samsung will only be left with an excess of the capacity of producing OLED display panels and nothing more.

The report hints towards a drop in demand for iPhone X in recent months, which has been remarkably sold in the previous quarter. Samsung’s excessive production capacity will be of no use if Apple decides to discontinue its product; as the report states,

“Samsung is increasingly selling OLED panels to outside clients,” said an official at an electronics trading company in Tokyo. Production of the iPhone X, whose sales have been sluggish, is expected to drop by half in the first three months of this year from the initial estimate of over 40 million units. Having ramped up production capacity to meet the demand for the latest iPhone, the first model to incorporate the panels, Samsung is now saddled with excess production capacity.”

Meanwhile, the smartphone manufacturers are reluctant to switch from LCD panels to OLED because of the additional cost. LG Display is one of the several companies building new OLED production lines, where many of the Chinese smartphone manufacturers who do use a higher priced display are reportedly increasing their own production capacity.