It is understood that Apple is planning to produce about 55 million units of two types of new OLED iPhones, which are expected to be released this fall. This amount is almost half of production goal of iPhone X (100 million units), which is their previous OLED iPhone model. Instead, Apple is planning to increase percentage of production of LCD iPhones. It seems that Apple is drastically modifying its business strategy on OLED iPhone due to low sales of iPhone X. South Korean industries are worried that they will be directly affected by Apple’s new strategy.
According to multiple representatives who are familiar with Apple, it is heard that Apple is planning to release two types of new OLED iPhones this fall, but it set size of their productions lower than that of iPhone X.
“Lack of iPhone X sales affected Apple’s iPhone business.” said these representatives. “Although Apple is going to release two types of new OLED iPhones, we heard from Apple that entire output of these two models will only be between 50 million and 55 million units.”
This range corresponds to half of production of iPhone X. Apple was planning to produce more than 100 million units of iPhone X after it decided to use OLED panel for its iPhones for the first time last year. Samsung Display and other relevant businesses decided to extend their facilities according to Apple’s plan.
However, Apple decided to cut production of iPhone X fast after its sales were lower than its expectation. Earlier this year, it lowered size of order of iPhone X for the first quarter by more than half compared to its initial plan.
According to industries, Apple set target values of iPhone X for January and February at 90 million and 75 million units and it decided to discontinue iPhone X in this coming September.
Lack of iPhone X sales directly affected South Korean electronic part industries. Operation rates of facilities of Samsung Display, which is the only one that is supplying OLED panels to Apple, dropped sharply due to lack of sales. Low operation rate indicates worsening of performance. Other manufacturers that produce other parts and materials such as RFPCB (Rigid Flexible Printed Circuit Board) and OLED materials were also affected one after the other.
South Korean businesses were expecting that number of orders will start to rise again as new OLED iPhones are expected to be released this fall. They still had hopes of recovering their performance especially because Apple is planning to release two types of OLED iPhones this year.
However, it seems that these expectations are going to be off by wide margin because reduction of production size of OLED iPhones indicates that Apple is showing conservative stance towards using OLED panels for its iPhones. According to industries, Apple is planning to produce about 55 million units of OLED iPhones and about 150 million units of LCD OLEDs this time.
Although Apple is going to increase production size of LCD iPhones, it is expected that other foreign businesses such as JDI and Sharp are going to benefit more than South Korean businesses. It is likely that South Korean electronic part industries will have difficult times in recovering their performance. In case of one company, it is facing difficulties as 80% of its sales had come from Apple, which cut production of OLED iPhones. As a result, it is carrying out unpaid leaves on entire employees. In case of a different company, it is at a point where it cannot operate its facilities in Vietnam that were extended due to high expectations from Apple’s supplies. Samsung Display and LG Display, which also had high hopes on Apple’s orders, are also slowing down their new investments and are affecting its partners as a result. South Korean electronic part industries are worried that they will face huge blow from Apple for the second time.
Staff Reporter Yun, Keonil | benyun@etnews.com & Staff Reporter Bae, Okjin | withok@etnews.com
