[THE INVESTOR] Local investment agencies forecast on Feb. 1 that Apple’s disappointing iPhone X sales would weigh down on Samsung Electronics’ display business.
“Reduced supply orders for the iPhone X and the strong Korean won are expected to cause Samsung’s revenue in the first quarter to drop by 4 percent to 63.4 trillion won,” said Noh Geun-chang, an analyst from HMC Investment Securities, in a report.
He also expected that Samsung Display, the display subsidiary of Samsung Electronics and the sole supplier of OLED displays for Apple, will see its profit margin drop significantly through the second quarter this year as a result of Apple’s decision to cut the production of the iPhone X by 40 percent from the previous quarter.
The US tech giant has reportedly halved the production order for the premium smartphone to 20 million units due to lower-than-expected demand.
Other analysts here also painted a grim outlook on Samsung, saying the negative impact stemming from the weak demand for AMOLED, used for the upper-end iPhone, is inevitable.
Kim Sun-woo, an analyst from Meritz Securities, anticipated that Samsung’s profits will be back on the upward trend after a drop in the first three months this year.
Announcing its fourth-quarter earnings results on Jan. 31, Samsung said potential risks from a certain client are not that much of a concern since it has diversified its customers.
Samsung earned 15.15 trillion won (US$14.15 billion) in operating profit with its revenue standing at 65.98 trillion won in the fourth quarter last year. The display business unit posted 1.41 trillion won in operating profit and 11.18 trillion won in sales, up respectively from 1.34 trillion won and 7.42 trillion won a year earlier. The Korean tech giant attributed, among others, the robust sales of the flexible AMOLED displays to the profit improvement.
By Kim Young-won (email@example.com