iPhone 11 Needs To Sell Well For Apple To Keep Up With Its Display Orders

We’vegotlessthantwoweeksbeforeAppleannouncesitsthird-quarterearningsfortheFiscalYear2019.Thecompany’sproblemswiththeiPhonearewellknown,andthisquarterwe’llbeabletotellwhetherthesmartphonehasreverseditsshipmentdecrease.Atitslastearningscall,Apple’smanagementindicatedthatsalesfortheiPhonewereimprovinginChina.Now,anewreportissuggestingthattheCupertinotechgiantisstrugglingwiththe2018iPhonelineup,particularlytheiPhoneXSMax.Takealookbelowformoredetails.

Apple’sUnitShipmentProblemsContinueWithThe2018iPhoneLineupAsTheCompanyStrugglesToHoldOnToSamsung’sOLEDSupplyChain

AnindustryreportfromSouthKoreatodayprovidesdetailsfortherelationshipbetweenApple.andSamsung.It’sawell-knownfactthatSamsungmanufacturersthebestsmartphoneAMOLEDdisplaypanelsoutthere.TheKoreantechgiant’sGalaxyS10andGalaxyS10PlusfantasticdisplaypanelsbelieveDisplayMate.Apple’siPhonestoofeatureOLEDdisplaysfromSamsung,primarilybecauseofthelatter’stechnologicalcompetenceandproductioncapacity.

It’saknownfactthatApplehasalreadypaidSamsung$683milliontomakeupfordecreasedOLEDorders.Now,we’vegotdetailsthathintatthebreadthofApple’siPhoneproblems.China’sCINNOIndustryResearchNewshascollecteddatasuggestingthatAppleagreedtoorder100millionOLEDdisplaypanelsfromSamsungthisyear.However,bytheendofJune,thecompanyhasonlysourced9millionofthesepanelsduringthefirstsixmonthsof2019.

Ifthefiguresaretrue,andpreviousreportsfromtheSouthKoreanpresssuggestthattheyare,thenApplemightseeabigdropinrevenueattheendofthisfiscalyear.Thecompany’sgotalotofbetshedgingonthe2019iPhone11lineup.Ifthesmartphonesdon’tsell,thentheCupertinotechgiantwillhavetocoughupmoremoneytoSamsung.Unlessitnegotiatesafuturesupplyagreementforthisyear’ssmartphones.

However,onthatnote,SamsungmightnotbewillingtoplayballwithApple.RecentJapaneseexportcurbshavecreateduneaseamongSamsung’sclients.Apple,forinstance,hasstartedtoaggressivelynegotiatewithBOEforitsiPhoneOLEDdisplaypanelsupply.Ofcourse,whethertheChinesecompanywillbeabletokeepupwithApple’sexactingdemandsisuncertain,andthisisareasonthattheiPhonemakermightwanttokeepitstiesstrongwiththeKoreancompany.

ToprovideApplewithhigh-qualitypanels,SamsunghasdedicatedproductionlinesinitsA3plant,whichistheworld’slargestOLEDdisplaymanufacturingfacility.TheA3plantiscapableofmanufacturing140,000-210,000displaypanelsinamonth.Capacityutilizationforthisplantfellbelow50%duetoApple’sorderreductionearlierthisyear.Outofthe9millionpanelsthatApplehassourcedfromtheA3plant,1.5millionwereorderedinthebottomendofthiscalendaryear’sfirsthalf.

Apple’sreducedordershavedrivendownSamsung’sReturnonInvestmentfortheA3by10%.ThishasledindustrywatcherstospeculatewhetherSamsungwastooeagertoinvestheavilyinitsOLEDplantinthefirstplace,asthecompanytoooverestimatedmarketdemandfortheiPhone.Finally,ifpooriPhonemarketperformancecontinuesduringthisyear’sholidayseason,thenApplemighthavetopaySamsunganadditional$100million.Thecompanyisexpectedtoship180millioniPhonesbySeptember.ItsiPhoneshipmentsfor2019’sfirstquartermarkedthesinglelargestYear-on-Yeardeclineinthecompany’shistory.

Thoughts?Letusknowwhatyouthinkinthecommentssectionbelowandstaytuned.We’llkeepyouupdatedonthelatest.

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