Samsung Allegedly Choking On OLED Oversupply Due To Lackluster iPhone X Sales

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Apple may have put up some record numbers for revenue in its last earnings report, but the company reportedly isn’t seeing the kind of demand that it expected for the high-end iPhone X smartphone. Supposed weak demand has allegedly led Apple to slash production of the smartphone in 2018.

That reduced production means that Apple suppliers, like Samsung, are now scrambling to find other customers to keep their production lines humming. Reports indicate that Samsung is currently searching for a new customer that can use its excess capacity to produce OLED screens -- capacity that was originally intended for Apple. Samsung ramped up its OLED production capacity specifically to meet the demand Apple had for the screens.

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Samsung is also facing increasing competition in the OLED panel market from Chinese manufacturers who have also increased production. "Samsung is increasingly selling OLED panels to outside clients," said an official at an electronics trading company in Tokyo.

Samsung is currently selling OLED panels at a price of over $100 each including the touch sensors. That is almost twice as expensive as a standard LCD such as what Apple uses in the iPhone 8 Plus. The iPhone 8 Plus LCD is also sourced from Samsung. The price of the screen is cited as one of the reasons why the iPhone X sells for $999 or more. Samsung is also seeing reduced demand for OLED panels internally as well. "Using OLED panels makes it difficult to compete with rivals on price," said Hiroshi Hayase, senior director at IHS Markit.

The problem with oversupply in the OLED arena will likely grow as more production lines come online. LG Display is expected to launch a new production line for OLEDs this year. In China, BOE Technology Group and Tianma Microelectronics have new OLED production lines in the works. Overall OLED production capacity is expected to double by 2020 compared to levels in 2017. This could be a good thing for consumers as it will force the price of OLED panels down.