Slashdot Mirror

← Back to Stories (view on slashdot.org)

Samsung Could Make $22 Billion Off Next Year's iPhones (cnet.com)

Posted by BeauHD on from the it-takes-two-to-tango dept.

According to a report by Korean outlet ETnews (via The Investor), Apple placed an order for 180 million to 200 million OLED displays from Samsung's manufacturing branch, Samsung Display, for the next round of iPhones. Each display is estimated to cost $110, which could mean the deal is worth up to $22 billion. CNET reports: The recently released iPhone X was Apple's first phone to feature an OLED display, rather than an LCD panel. Samsung, on the other hand, has been using OLED displays in its phones for quite some time. Currently Samsung holds a near monopoly on the world's manufacturing of OLED screens. As a result, Apple had little choice but to turn to its rival for this type of screen. This isn't the first deal of its kind. Earlier this year it was reported that Apple bought 60 million OLED displays from Samsung, apparently for what would later become the iPhone X. According to the report, Apple's next order is up to four times larger than this previous order. Demand is so high that Samsung considered opening a new manufacturing plant to process Apple's order, the report said, but has been able to manufacture enough of the panels to fill Apple's order.

5 of 43 comments (clear)

  1. Samsung could gross $22 billion by RhettLivingston · · Score: 2, Informative

    We have no idea how much they will make (a word usually synonymous with "profit") or even whether they will make anything at all on the deal given how expensive, and even risky, the tech is to develop and produce. Only time will tell.

    1. Re:Samsung could gross $22 billion by ShanghaiBill · · Score: 3, Informative

      The easiest way to tell if a journalist is economically illiterate is when they don't understand the difference between revenue and profit.

      TFA was written by someone who is not qualified to be writing about business.

    2. Re:Samsung could gross $22 billion by RhettLivingston · · Score: 2

      Apple is paying somewhere between $65 and $71 per display depending on where you get your numbers. The variance in the cost per display in different reports is likely due to market variance caused by the supply pinch.

      The $110 number comes from an analysis of the total that Apple is paying for all Samsung components that they use in the phone and is still the gross amount, not the profit.

      The full production cost of the iPhone X is said to be around $357. There isn't exactly room in that for Samsung to make $110 profit on a display.

    3. Re:Samsung could gross $22 billion by gnasher719 · · Score: 2

      Or, in other words, Samsung is making about what Apple's Irish fine is, and Apple still has more money than anyone.

      Just saying: There will be no "Irish fine". There _may_ be a correction of Apple's Irish tax bill.

    4. Re:Samsung could gross $22 billion by RhettLivingston · · Score: 2

      Samsung OLED operating margins are 12% to 22%, which would put the profit on $22 billion at around 2.5 to 5 billion dollars.

      Exactly. They will "make" something less than $5 billion assuming there aren't further issues waiting in the wings as these screens age. They will not make $22 billion. But that is the way most are reading these headlines and articles. The comments and follow-on analyses present on virtually every article that has reported this show that the readers are being successfully misled into believing that Samsung is pocketing $22 billion profit.

      There also seems to be a lot of confusion on the actual gross amount Samsung is getting paid for the OLED displays. Contracts reported in the April timeframe worked out to $71 per display. The whole display assembly was reported as $110 as recently as November 8th but includes components such as the touch panel and glass that come from other vendors. The Samsung component is just a piece of that. Many articles, including the WSJ article that started this latest media storm on an old subject have played very loose with the numbers and terms in an apparent attempt to hype Samsung whose stock has been moved by this.

      There was also some fast and loose comparison with the Samsung's profit on this versus the Galaxy 8. They limited the comparison to component sales, leaving out the profit that Samsung makes on the phones themselves. Just as Apple makes more profit than the total production cost on each iPhone, Samsung's big profit is on the phones, not the components.