Samsung shows Q1 operating profit drops 56% year-on-year amid weak iPhone sales and rising competition

According to Jiweiwang news, Samsung Display (SDC) operating profit fell 56% year-on-year in the first quarter of 2024 due to sluggish iPhone sales and fierce competition from Chinese panel manufacturers. How Samsung Display will respond to this has attracted much attention.

Samsung Electronics recently released its financial report for the first quarter of 2024. Its panel subsidiary Samsung Display revenue reached 5.39 trillion won (approximately US$3.9 billion) and operating profit reached 340 billion won, a year-on-year decrease respectively. 18% and 56%, down 44% and 83% respectively from the previous month.

Industry analysts believe that Samsung Display’s operating profit dropped significantly in the first quarter of 2024, largely due to weak iPhone sales during the same period, because the flexible OLED panels used in iPhone accounted for more than 70% of Samsung Display’s operating profit. According to data from market research company IDC, iPhone shipments in the first quarter of 2024 totaled 50.1 million units, a year-on-year decrease of 9.6%, with the sales decline in the Chinese market being particularly obvious.

Amid sluggish iPhone sales, Chinese smartphone manufacturers are expanding inventories of smartphones and OLED panels to seize the gap left by the iPhone. Chinese panel companies expect to fully utilize their sixth-generation flexible OLED production lines by the end of 2024.

At the same time, the increase in demand for Samsung Display’s rigid OLED panels has led to an increase in the utilization rate of rigid OLED production lines, effectively mitigating the decline in revenue. However, in order to compete with flexible OLEDs from Chinese manufacturers, Samsung Display cannot raise prices, which affects profitability.

Samsung Display said that in the small and medium-sized display business in the first quarter, flexible OLED production responded promptly to the launch of high-end smartphones from major customers, and the utilization rate of rigid OLED also increased due to increased sales. However, revenue fell slightly due to intensified market competition. In the second quarter, although sales are expected to grow as demand for new folding screen devices and IT products expands, performance improvement may be limited due to market competition.

In terms of large-size display business, market demand has declined during the off-season, but Samsung has effectively reduced the scale of losses by launching new QD-OLED products. In the second quarter, we will steadily meet the needs of large customers and promote high-end display sales.

Looking forward to the second half of the year, Samsung Display expects the smartphone market to grow slightly compared with 2023, and OLED penetration continues to increase. Therefore, it will maintain its competitive advantage through low-power, high-durability flexible OLEDs, while accelerating the replacement of rigid OLEDs for LCD panels by reducing costs.

In addition, Samsung Display plans to apply the latest technology to new folding screen products in 2024 to improve the performance of the panel in terms of wrinkles, anti-scratch, power consumption, etc., thereby widening the quality gap with competitors. gap.

In the field of large-size QD-OLED, Samsung Display will increase production capacity without additional investment and is committed to improving production efficiency, aiming to increase the sales proportion of high-end products. At the same time, Samsung Display will expand the proportion of IT and automotive displays to diversify its business structure.

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