Samsung Delaying Operations At New OLED Plant Amid iPhone X Lukewarm Sales

The lukewarm sales of Apple’s iPhone X continue to affect the Cupertino giant’s partners. South Korean industry sources revealed that because of the slowing demand for the 10th anniversary iPhone, Samsung is delaying the production of more OLED panels at its new plant.

The Investor reported Tuesday that Samsung’s display-manufacturing unit has failed to realize its plans for its new OLED plant, which it built in preparation for the launch of Apple’s first OLED iPhone last year. Industry sources are claiming that this happened due to the disappointing performance of the iPhone X on the market and the slowing demand for the device in China.

Samsung’s new OLED plant, tentatively called the A4 plant, was built prior the launch of the iPhone X. Samsung Display poured almost 4 trillion won or US$3.70 billion on this project because, like Apple, it also anticipated strong demand for the 10th anniversary iPhone. The project even pushed Samsung to transform some of its LCD production lines into those for OLED.

Unfortunately, Apple ultimately decided to make changes to its production plans for the iPhone X after seeing lukewarm responses from multiple markets, especially the U.S., during the holiday season of 2017. In effect, it cut its target of more than 100 million units to 90 million in January. Then in February, it reduced its target to 75 million units. At present, Apple is now targeting about 55 million units.

Samsung Display is now poised to manufacture around 60,000 units of OLED panels per month. However, sources say operations at the company’s new plant could be delayed for up to six months. This is because Samsung is still waiting for new orders from Apple or from Chinese phone companies.

The South Korean tech firm was actually hoping to see more Chinese phone makers transition to OLED this year after Apple’s move to come up with its first OLED iPhone. However, Chinese companies are discouraged to adopt OLED panels in their new releases due to the lackluster performance of the iPhone X.

All in all, Samsung’s problem with its new OLED plant is not something that can be blamed solely on the iPhone X. Samsung, on its part, failed to properly gauge and anticipate the demand for OLED panels among Chinese phone companies. It hastily invested in a new OLED facility thinking that Chinese brands would just follow Apple after the latter introduced the iPhone X. Sad to say, most companies are sticking with LCD, which is getting cheaper by the day.