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Company News >> Why does Samsung prefer to reduce production of OLED panels rather than cut prices for sales? 19th,March,2018
                                             Foreign media reports that after Apple reduced the iPhoneX orders, OLED panel supplier Samsung also lowered the production capacity of OLED panels, in the case of Apple's hot demand for OLED panel led Chinese mobile phone companies are trying to use more OLED panel mobile phone cases Why is Samsung not willing to cut prices to sell OLED panels for more revenue?
Samsung dominates the market for small and medium sized OLED panels
The current global OLED panel manufacturers mainly include Samsung and LGD. Samsung produces small and medium-sized OLED panels for smart phones and other digital products, while LGD produces large-size OLED panels for consumer electronics such as TVs, in small and medium size OLED panels. Market Samsung holds more than 90% market share. LGD is also promoting the production of small and medium sized OLED panels. However, it is currently encountering technical difficulties. Originally it was expected to supply Apple with small and medium sized OLED panels this year. However, there is recent news that it will not be able to achieve this goal until the next year.
Chinese panel makers are actively producing OLED panels. The largest panel manufacturer, BOE, has started production of small and medium sized OLED panels in October last year. The second largest panel maker, Huaxing Optoelectronics, is building an OLED panel production plant in Wuhan and is expected to start production next year at the earliest. There are small and medium-sized panel makers and Fai Optoelectronics with relatively small capacity, but considering the need to increase the yield and improve the technology after the OLED panel is put into operation, the industry is generally expected to wait until next year or even 2020 for Chinese panel companies to have an impact on the global OLED panel market.
Under such circumstances, at least this year and next year, Samsung will remain the dominant player in the small and medium sized OLED panel market. It is difficult to challenge Samsung in terms of production capacity. Even if Samsung’s share of the global OLED panel market declines by 2020, it will remain technically Leading edge, after all, it has been working in the OLED panel industry for 10 years.
Global demand for OLED panels increased
Samsung is the world's largest mobile phone company. It has always regarded OLED panels as one of its own mobile phone's competitiveness. Therefore, its high-end mobile phones and mid-range mobile phones all use their own OLED panels. The second-largest mobile phone company, Apple, is said to push three new iPhones this year. Two of them use OLED panels. The larger-screen iPhone has a larger OLED screen size, which will further increase its demand for OLED panels.
Chinese mobile phone companies have become a global force. In 2017, seven out of the world’s top ten smart phone companies came from China, and the shipments of smart phones from Chinese mobile phone brands exceeded the sum of the top two smartphone brands Samsung and Apple. They have been reluctant to win shipments only in the low-end and mid-range smartphone markets, and they hope to compete with Apple and Samsung in the high-end smartphone market, so they are also willing to purchase the top components of mobile phones.
Among domestic mobile phones, OPPO and vivo are the biggest winners of OLED screen mobile phones. In 2016, these two mobile phone companies accounted for more than 70% of the market share of OLED screen mobile phones. OLED screens are even better in terms of color display, and the mobile phones of these two companies are Emphasis on the shooting function, the use of OLED screen allows users to get better photo display, which makes them willing to pay more to purchase OLED panels, the two companies are said to ensure that Samsung supplies OLED panels to pay a huge deposit, purchase The OLED panel price is also higher.
Huawei and Xiaomi are also willing to purchase Samsung's OLED panels. However, due to various reasons, these two companies currently have limited supply of OLED panels from Samsung. Millet note2 previously adopted by Xiaomi adopts LGD's OLED panel but it has been shown to have graininess and other issues, which forced it to switch to Samsung's OLED panel; limited by the supply of OLED panel, China’s previous high-end mobile phone uses LCD panel as much as possible. However, in the case of Samsung and Apple, both high-end mobile phone brands are adopting OLED panels, Huawei, which is interested in competing with the two companies in the high-end mobile phone market, will naturally adopt more OLED panels.
The fingerprint recognition technology under the screen has begun to be sought after, and the OLED panel that can perfectly support the fingerprint identification technology under the screen is a more lightweight OLED panel, which also prompted domestic mobile phone brands to purchase more OLED panels, all of which led to the global mobile phone industry to OLED. The demand for panels has increased.
Samsung would rather cut production than sell OLED panels
With the increasing demand for small and medium sized OLED panels in the global mobile phone industry, Samsung, which dominates the small-to-medium size OLED panel market, has naturally become the biggest beneficiary. The 2017 results display panel business is Samsung's main source of profit, and this business's contribution to Samsung's profits is second only to that of memory chips. In such circumstances, Samsung will naturally ensure that the profits of the OLED panel business will be given top priority.
Among smart phone companies, Apple is obviously willing to pay higher costs to supply Samsung's high-grade OLED panels. Chinese mobile phone companies are more willing to adopt lower-cost LCD panels because of the cost relationship. They also hope to adopt more OLED panels in mid-to-high-end mobile phones, but because the price of their mid- to high-end mobile phones is much lower than that of Samsung. And Apple's mobile phone, so in the price game naturally want Samsung to reduce the price of OLED panels and wait and see, but as the dominant Samsung obviously does not want to be so.
So in the game, Samsung released a reduction in the production capacity of OLED panels to demonstrate to Chinese mobile phone companies that even this will not cut prices, but also because of their own mobile phones and Apple iPhone demand for OLED panels, especially Apple The iPhone contributed a lot of profits to Samsung's OLED panel business, which made it more emboldened to ensure the profits of the OLED panel business.
I believe that in this year and next year, Samsung still dominates the small and medium sized OLED panel market, Chinese mobile phone companies can not get rid of the dependence on Samsung OLED panel, but they need to keep up with this trend to make a difference in the high-end market, Samsung can still be able to Forcing China's mobile phone companies to accept its OLED panel prices, among which the OPPO and vivo among the top four domestic manufacturers have always been Samsung OLED panel customers. Samsung should be able to get the OLED panel business to continue to provide it with huge profits.

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