November 22, 2024

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[THE INVESTOR] Samsung Display has reportedly decided to reconsider its planned 1 trillion won (US$925 million) investment in its new OLED plant, possibly due to growing uncertainties in global smartphone sales, according to news reports on Jan. 23.

Local news outlet The Bell reported that the display-making unit of Samsung Electronics is reviewing the investment plans for the new A5 plant from scratch, with related equipment orders also being suspended. 

Samsung Display is the sole OLED supplier for Apple`s iPhone X.

The plans for the A5 plant were announced in July last year as part of Samsung's new huge OLED production complex in Asan, South Chungcheong Province. Sources had predicted equipment installation at the plant, including Cannon Tokki’s vacuum machine, could start from the latter half of this year.

But the report said almost no progress has been made in the plant construction over the past six months. “Construction work has not started on the plant site and they just keep digging the land,” an unnamed source was quoted as saying in the report.

Uncertainties about the market demand seems to be the key issue as the global smartphone market is showing some signs of negative growth, largely driven by slowing sales in China.

According to market tracker Strategy Analytics, smartphone shipments in China decreased 3.1 percent to 117 million units in the third quarter last year compared to the previous quarter. The fourth-quarter shipment is also estimated to see a further 4.3 percent decline.

Samsung Display used to focus on orders from its parent firm Samsung Electronics and Apple. More recently, however, it has been beefing up production due to growing demand from Chinese handset makers.

Another issue is lukewarm sales of Apple’s iPhone X, the first iPhone with an OLED screen. Some analysts say Apple could stop parts orders for the iPhone X, including the panel, for a few months in the first half of this year.

A Samsung spokesperson declined to confirm the report.

By Lee Ji-yoon (jylee@heraldcorp.com)