Samsung Electronics is reportedly putting the operations of its OLED production plant in South Korea to a halt for up to six months, as sales of the Apple iPhone X are stagnating and demands for OLED screens from China's phone makers are diminishing, recent reports indicate. The iPhone X is the first OLED smartphone from the Cupertino-based tech giant, with Samsung as the supplier of the handset's display panel. However, Apple recently moved to scale back the production of its 2017 flagship iPhone model due to its lower-than-expected sales, causing an oversupply of Samsung Display's smartphone OLED panels.
It is, perhaps, important to remember that Samsung Display signed a two-year OLED contract with Apple last April in a deal that was estimated to be worth $9 billion. Apple initially projected to hit more than 100 million unit sales for the iPhone X. However, its sales target has now been slashed by half for this year due to the cold reception from consumers. As a result, Samsung Display decided to hold back its OLED production in its home country until Apple and a number of Chinese smartphone manufacturers place new orders for OLED panels. An earlier report from market analyst firm IHS Markit predicted that flexible OLED display production is going to outpace demand for the panels by about 44-percent throughout this year. It's no secret that OLED panels are more expensive than LCD screens, a fact that is believed to have contributed to the sluggish adoption rate of OLED panels in general. Naturally, the OLED screens have become almost exclusively the choice for the manufacturers of the higher-end smartphones. However, the majority of phone makers in China are still largely focused on mid-range handsets, leaving Samsung with little choice but to drastically deal with the situation.
Recent reports indicate that less than 10-percent of smartphones manufactured by Chinese original equipment manufacturers have adopted OLED displays, with the rest of their device offerings continuing to depend on LCD panels. The weak demand for OLED panels now leaves Samsung scampering to look for other outside clients in order to alleviate the losses. However, things might be difficult for the South Korean tech giant due to the hefty cost of OLED screens.