Evidence is mounting that the iPhone X is a bust.
Less than a month after Apple reportedly told suppliers that it was slashing production targets for its $999 phone in half, the squeeze is being felt farther down the supply chain.
Apple’s smartphone rival Samsung — which builds the OLED screens that Apple uses in its flagship gadget in addition to making its own Galaxy phones — is drastically reducing the number of displays that it is going to produce, according to the Japanese news service Nikkei.
Instead of producing 45 to 50 million panels between January and March, the South Korean tech giant will be making closer to 30 million, Nikkei reported Tuesday.
As a result, Samsung’s display business is likely to see a revenue drop this quarter. The parts maker earns more money from the parts it produces for the iPhone X than from Galaxy phones.
In late January, Nikkei reported that Apple was halving its production target from 40 million units during the first three months of the year to 20 million.
The production cut was reportedly prompted by slower-than-expected sales in the holiday shopping season in Europe, the US and China.
The Cupertino, Calif.-based company reported a decline in iPhone sales in its last earnings report but hit a revenue record thanks to the X’s stratospheric price tag. The cost of the average iPhone now sits at $796.
In an earnings call with investors earlier this month, Cook shrugged off sales concerns and declared that the iPhone X has set Apple up “for the next decade.”
Indeed, the OLED slowdown may not last for long. Last week, Apple informed developers that all new apps submitted to the App Store must support the iPhone X’s edge-to-edge display.
Apple’s instructions to developers add fuel to the rumors that its next batch of iPhones — likely to be introduced next fall — will have notched screens similar to that of the iPhone X.
In November, KGI Securities analyst Ming-Chi Kuo said that he expects Apple to introduce a trio of new iPhone models in 2018, all of which will use screen gestures instead of a home button.
Apple will keep the 5.8-inch OLED phone and will also introduce an even bigger, 6.5-inch OLED device as well as a 6.1-inch phone with a lower-resolution LCD display, Kuo said — a prediction which has since been mirrored in a number of other reports.
Rather than keep the iPhone X as a cheaper option for customers — the same way it still sells the iPhone 7s and 6s — Apple will reportedly put the X out to pasture so as to not undercut the sales of its new model.
