Apple is reportedly demanding better OLED prices from Samsung for the next iPhone
Samsung is the sole supplier of OLED panels for Apple’s iPhone X. The Korean giant was expected to make around $22 billion in revenue from supplying OLED panels to Apple in 2018. Since Samsung was the only supplier who could meet Apple’s demands in terms of quantity and quality, the company was able to command a premium price from Apple for its OLED panels. However, Samsung may not be able to repeat the same for OLED panels for the next iPhone.
Weak demand for iPhone X, after the initial euphoria driven by Apple fans, has reportedly forced the Cupertino giant to lower sales projections and cut down on component orders from suppliers, including Samsung. Making things worse, Chinese OEMs defied Samsung’s expectations and didn’t make the shift to OLED panels after the launch of the iPhone X, resulting in excess production capacity for Samsung.
Samsung lost some of the bargaining power
Samsung reportedly plans to produce 200 million OLED panels this year, of which 100 million panels are for Apple. It is twice the number of panels Samsung supplied to Apple last year for its iPhone X. Samsung plans to produce about 25 million OLED panels for the iPhone X and the rest for the iPhone X’s successor due to arrive later this year. Production of OLED panels for the next iPhone will begin next month, starting with 2-3 million panels before doubling the output in June. Samsung has apparently resumed operations at the A3 line which was earlier shut down due to overcapacity.
According to local reports, Samsung and Apple are in negotiations over the price of the OLED panels, with the latter reportedly asking for price cuts for those panels. The scale at which Apple buys OLED displays gives it the bargaining power to demand better prices from Samsung, which is already reeling from underutilized production capacity. Last month, the CEO of Samsung Display apparently met with Apple executives to negotiate prices but failed to reach an agreement.
Though never officially announced, Apple apparently paid $110 (some reports peg this between $120 to $130) per OLED panel supplied by Samsung, which was almost 1/3 of the total cost of making an iPhone X. Apple obviously wants to bring the cost down and is expected to pay around $100 per panel this year as per industry sources. Reports state that Samsung is considering price cuts for OLED panels to some extent to address the problem of production overcapacity.
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Looks like not even iZombies are willing to pay £1000+ for a phone.
The price info in this article is wrong. Apple paid $70 for the X screen, it was an older gen screen, and the other $40 of the $110 was on other Samsung components. The screen on S9 is $150 and $170 for S9 plus. Samsung will have been very disappointed by Apple not fulfilling it’s promise on quantities due to the failure of iPhone X to reach even half its target. Running a business myself I would increase the price as there will be another notch this year and they will do equally badly. Next year when Apple drop the… Read more »
Do you have a source for the pricing information you mentioned?
It’s cute that you want to pose as someone who knows what they’re talking about, but claiming that it was “an older gen” screen kinda outed your bluffing. The screen was not “older” or even “existent” before, as it was a custom design that was made to order according to specs requested by Apple according to their own design. That’s how in the third party screen tests it outperformed even samsung’s current offerings at the time. Nice try though.
THEPANTSPARTY It only outperformed Samsung’s current offerings in full-screen brightness on a technical level. The rest is all down to tuning, which has always been the job of the phone manufacturer. Everything else is the same technology essentially including the Pentile layout. The only thing that is custom is the shape, size drive component and tuning..
Surelt if this is true then Samsung can just say no? go find someone else to provide your panels?
As you can read from the article, Samsung is expected to make as much as $22 billion in revenue from supplying OLED panels to Apple. Not easy for Samsung to say no to Apple.
Lol because its that easy for Samsung to turn their back on 22 billion in revenue? Not to mention the over supply they already have as Chinese OEM aren’t buying. Apple has em by the balls. They have every right to negotiate pricing.
Not really, Apple can’t go back to LCD now, LG Amoleds are second rate, even LG are dropping their own screens for their next flagship!…. and they can’t make enough anyway. Only Samsung can supply them. It’s Apple who’s balls are tightly gripped. They’ll do a deal but Samsung will want concrete quantity guarantees this time around after the iPhone X failure. They didn’t even hit 50% of their promised target.
Demanding? Apple is no place to demand anything. And why do they want a better price for them either way? So they can make even bigger profit out of their already overpriced crap? The audacity…