Samsung Posts Huge Growth In Q1, Reports 'Slow Demand' For OLED Displays
Samsung reported that revenue and profits surged during the first quarter of the year, ended March 31, driven by strong sales of the newly released Galaxy S9 and major demand for memory chipsets.
One notably sluggish area, however, was Samsung's display panel segment. Samsung manufactures the OLED screens that are used in non-Samsung smartphones such as Apple's iPhone X. And while Samsung does not mention Apple in its earnings disclosure, the previously reported slowdown in demand for the iPhone X seems to correspond to Samsung's results.
For Samsung's display panel segment in the first quarter, "profits were affected by slow demand for flexible OLED panels," the company said in its news release .
And that is not expected to change for the second-quarter results, Samsung said -- which again lines up with what industry analysts have been reporting about an ongoing drop-off in demand for the iPhone X.
"For the second quarter, Samsung expects the memory business to maintain its strong performance, but generating overall earnings growth across the company will be a challenge," Samsung said, due to factors including "weakness in the display panel segment."
The outlook could impact Apple's reported intention to negotiate lower pricing for OLED displays from Samsung .
Apple's reported pursuit of lower pricing may be aimed at helping the upcoming iPhone releases, expected this fall, to grab more consumer appeal with a lower price than the $999 iPhone X.
Analyst Neil Campling of Mirabaud Securities last week predicted that the iPhone X will be taken off the market this year, as many consumers have been staying away due to its high price. "The iPhone X is dead," Campling reportedly wrote in a note to investors.
Released in November, the iPhone X is the first Apple smartphone to feature an OLED display, which provides more vibrant colors than the standard LCD. But Apple has had to depend completely on rival Samsung to provide the display panels. Apple reports its earnings Tuesday for the first three months of 2018.
For Samsung, the first quarter brought record operating profits of $14.45 billion, up 58 percent from the same period a year earlier.
Revenue reached $56.25 billion during the quarter, an increase of 19.8 percent year over year.
Samsung attributed part of the growth to an earlier-than-usual global release of the new premium Galaxy phones, the S9 and S9+, along with "solid sales" of the Galaxy S8, the company said.