ArrowArtboardCreated with Sketch.Title ChevronCrossEye IconFacebook IconIcon FacebookGoogle Plus IconLayer 1InstagramCreated with Sketch.Linkedin IconIcon LinkedinShapeCreated with Sketch.Icon Mail ContactPath LayerIcon MailMenu BurgerIcon Opinion QuotePositive ArrowIcon PrintRSS IconIcon SearchSite TitleTitle ChevronTwitter IconIcon TwitterYoutube Icon
Electronics

Samsung to slash OLED panel output as iPhone X slumps

Production for Apple to halve after $12.6bn capital investment last year

Samsung Electronics has been hit hard by Apple's decision to halve the output of the iPhone X in the January-March quarter.

SEOUL -- Samsung Electronics is to slash production at its OLED panel plant in response to customer Apple's decision to reduce output of the iPhone X following weak demand.

Samsung Display now plans to manufacture organic light-emitting diode panels for 20 million or fewer iPhones at the South Chungcheong site in the January-March quarter. The initial goal was to supply panels for 45 million to 50 million iPhones.

The company has yet to decide its production target for the April-June period, but a further cutback may be in store.

The new target will reduce production at the plant to around 60% of the original plan. When it comes to the facility dedicated to making panels for Apple, the rate will fall to 50% or lower.

The Samsung group unit is looking to offset the impact by securing more orders from Chinese and other customers.

Samsung's display business is expected to see a year-on-year profit decline for the first half of 2018. Anticipating a demand surge from Apple, the company made a 13.5 trillion won ($12.6 billion) capital investment last year, resulting in a 1.5 trillion won increase in depreciation costs in 2018.

The display business's operating profit in the October-December period came to 1.41 trillion won, undershooting market expectations by 400 billion to 500 billion won.

The business recorded 1.7 trillion won in operating profit in the April-June quarter of last year, its highest figure going back six years. Some predictions had called for the number to exceed 2 trillion won in each of the first and second quarter in 2018. But now that seems like a tall order.

Still, many stock analysts see the business' earnings starting to grow in the July-December half, as they believe orders from Apple will recover by then.

Apple's struggle with the iPhone X is affecting production of other parts as well, bringing down memory-chip prices.

You have {{numberReadArticles}} FREE ARTICLE{{numberReadArticles-plural}} left this month

Subscribe to get unlimited access to all articles.

Get unlimited access
NAR site on phone, device, tablet

You have {{numberReadArticles}} FREE ARTICLE{{numberReadArticles-plural}} left this month

Subscribe to get unlimited access to all articles.

3 months for $9

Get unlimited access
NAR site on phone, device, tablet

Your trial period has expired

You need a subscription to...

See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

See all offers
NAR on print phone, device, and tablet media