Samsung downplays impact of weak iPhone X sales on its revenues
Yesterday Samsung released its Q4 2017 earnings, where the company posted a record high profit for the last quarter. Despite this performance, many people were skeptical if Samsung will be able to maintain this momentum due to various uncertainties in its components business.
Less than expected sales of iPhone X is one such factor many analysts believed will have a negative impact on earnings from Samsung’s display division in the next few quarters. With Samsung being one of the largest component suppliers for Apple’s smartphones overall, weak demand for iPhones is presumed by many analysts to be bad news for Samsung anyway. In fact, reports estimated that Samsung’s component business would make more money supplying to iPhones than to the in-house Galaxy S8 and Galaxy S8+.
Samsung is confident in its diverse portfolio of clients
However, amidst all this chatter about weak iPhone X sales, Samsung has downplayed its impact on its revenues. Samsung seems to be confident in its diverse portfolio of clients negating any adverse effect by any one of its customers.
Answering to a question on the potential impact of weak demand for iPhone X during a conference call, a Samsung executive said, “It is hard to give specific details, but we have been trying to diversify our clients and reduce reliance on a certain customer to build a healthy portfolio. The company’s business will not be affected much by a certain customer.”
After Apple, Samsung is reported to be the biggest beneficiary of iPhone X sales as it’s the only supplier of OLED panels for Apple’s first OLED iPhone. Samsung was rumored to make around $14.3 billion in revenue if iPhone X sales were up to the expectations.
Samsung was the only company which could meet Apple’s expectations in terms of quality and scale for supplying OLED panels. Samsung was predicted to make as much as $22 billion in revenue from supplying OLED panels to Apple in 2018. When news about Samsung reconsidering its plans to build a new OLED factory in South Korea surfaced in media, many believed weak demand for iPhone X sales was one of the factors. We have to wait for a couple of quarters to see if weak iPhone X sales will have any substantial impact on Samsung’s revenues.