Lukewarm iPhone X Sales Force Samsung To Stall OLED Plant

Samsung Display has decided to stall its investment in a new OLED plant amid the lukewarm sales of Apple’s iPhone X. The decision is also seen as the company’s response to the uncertain market demand for its smartphone OLED panels.

The Investor reported Tuesday citing local news outlet The Bell that Samsung is reconsidering its planned 1 trillion won or US$925 million investment in a new OLED production plant. The South Korean tech giant is reviewing its plans for the new structure from scratch, and it has also suspended orders for related equipment.

Samsung Display has been focused on fulfilling orders from its parent company Samsung Electronics and its biggest rival, Apple, since last year. The South Korean company, after all, is the sole supplier of Apple‘s first OLED iPhone. But now that the 10th anniversary iPhone is not really performing that well in the market, Samsung is discouraged to move forward with its planned investment.

IBTimes learned early last week that Apple is decreasing its component orders from its suppliers following the decline in the demand for its 2017 iPhones. The move will mostly affect upstream suppliers who are producing camera modules, memory chips, 3D sensing modules and other components for the iPhone 8, 8 Plus and iPhone X.

Analysts claim, however, that Apple could also temporarily halt orders for iPhone components, including the OLED panels for the iPhone X, for a few months in the first half of this year. If true, then this explains why the Galaxy S9 maker is reluctant to invest in its new OLED plant for now.

Aside from its parent company and Apple, Samsung Display has also been beefing up production of OLED panels for Chinese manufacturers. Unfortunately, smartphone sales in China have been slowly decreasing. In the third quarter of 2017, smartphone shipments in China saw a 3.1 percent decline. The shipments further went down in the fourth quarter with a recorded 4.3 percent decline, according to market tracker Strategy Analytics.

Given all these unfortunate circumstances, there is indeed enough reason for Samsung to reconsider its planned A5 plant. It was in July last year when the company announced that it was building a huge OLED production complex in Asan, South Chungcheong Province of South Korea.

A source familiar with the A5 plant project disclosed there’s been no progress on the construction of the facility over the past six months. “Construction work has not started on the plant site and they just keep digging the land,” the source said. It’s possible that Samsung may have already thought of gauging the demand for its OLED panels first six months ago, and it waited to see the results before deciding on wether or not it should push through with the project.