Samsung Display Achieves Record OLED Earnings in Q3’19

Published November 4, 2019

Highlights of Samsung’s latest earnings call from a display perspective were as follows:

  • Display revenues were up 19% Q/Q and down 14% Y/Y to $7.75B with operating income rising 53% Q/Q and flat Y/Y at $983M. The growth can be attributed to strong demand for higher priced flexible OLEDs as well as high utilization at rigid OLED fabs.
  • The OLED mix was reported as mid-80%. We believe it was 84%, up from 79% in Q2’19.
  • OLED revenues rose 26% Q/Q to $6.5B, but were still down 10% Y/Y. Strong demand from Apple and Samsung for flexible OLEDs and from Samsung and Chinese brands for rigid OLEDs drove the growth. Units by brand and model # can be found in our Quarterly OLED Shipment Report.
  • LCD revenues were down 9% Q/Q and 29% Y/Y to $1.2B, a new low.

​Samsung Displays’ OLED and LCD Revenues

Source: DSCC’s Quarterly Display Supply Chain Financial Health Report

OLED operating profits jumped by 57% Q/Q and 29% Y/Y to establish a new high of $1.25B. OLED operating margins improved from 15% to 19%, hitting the highest value since Q2’17. LCD operating income worsened, falling 74% Q/Q to -$270M, the 4th worst result since Q1’15 with margins dropping to -22%. SDC is expected to mitigate LCD losses by shutting down LCD capacity and limiting its production to high-end panels.

Samsung Displays’ OLED and LCD Operating Income

Source: DSCC’s Quarterly Display Supply Chain Financial Health Report

SDC’s OLED, LCD and Display Operating Margins

Source: DSCC’s Quarterly Display Supply Chain Financial Health Report

On Display Capex, Q3’19 was flat at KRW 500B ($419M). Q4’19 Display Capex will jump to $1.3B though. This will likely be divided between Y-OCTA at A3 and down payments for QD-OLED tools. Samsung indicated 2019 company-wide capex will end up similar to 2018 at KRW 29 Trillion. 23.2T for semiconductors and 2.9T for displays.

In terms of earnings call commentary:


  • Q4’19 Outlook
    • Mobile OLED revenues may be stable in Q4’19, but earnings are expected to weaken due to lower than expected demand for certain premium products and rising costs from lower utilization of rigid OLED lines. They intend to boost efficiency by expanding adoption of their differentiated technologies.
    • In LCDs, Samsung expects earnings to worsen further as ASPs continue to fall and demand is seasonally slower. Will increase focus on high-end monitors and public displays.
  • Display Profitability
    • Mobile OLED profitability improved Y/Y due to cost reductions from increased utilization and higher productivity.
    • LCD TV panel loss worsened as ongoing G10.5 capacity expansions impacted pricing.
    • Most of their LCD capacity in Korea will be converted to QD-OLEDs.
    • KRW 10T is for equipment and 3.1T is for R&D.
    • They believe their QD technology has advantages in terms of color gamut, viewing angle and resolution and can be expanded to not only TVs, but also monitors and other display applications which is another advantage.
  • 2020 Outlook
    • Will work to boost utilization by enhancing price competitiveness and OLED’s advantages in power consumption, thickness and design to solidify leadership in 5G and other premium devices. Will boost other OLED markets in seasonally slow periods such as tablets, notebook PCs and automotive as well as to boost foldable demand.
    • For LCDs, will continue to structure around QD displays. Will remain focused on differentiated products such as ultra-large TVs, 8K and value added monitors. Will also emphasize curved and gaming monitors.

Other highlights from a display perspective:

Consumer Electronics:

  • TV revenues grew in Q3’19 due to strong sales of premium models such as QLED and ultra-large. But profits were down on rising competition.
  • Q4’19 - Expects stronger sales and earnings in seasonally strong Q4, will focus on premium products. Expect TV shipments to grow 30% Q/Q in Q4 after a 15% Q/Q increase in Q3. 2019 unit volumes to grow high single digits.
  • For 2020, continue to focus on QLED and ultra-large models and boost lineup and sales of 8K TVs.
  • They expect the TV market to grow in 2020 thanks to World Cup and the Olympics although economic instability in emerging markets remains a concern.
  • Mentioned micro LEDs which offer no bezel, no limits in size, resolution or shape.

IT& Mobile

  • Handset sales were 85M, up from 83M. Tablets 5M. Blended handset ASP was mid-$230, up from $210 and mix of smartphone in total handset was in the low 90s. The >10% increase in ASPs was a big deal.
  • Smartphone revenue grew thanks to Note 10 and A Series sales and higher profitability in the low end market. Profit rose on product mix improvements, cost reductions and lineup transition. Extended technology leadership through 5G models and Galaxy Fold.
  • Network business - benefited from rapid commercialization of 5G in Korea.
  • Regarding the Galaxy Fold, believe they had positive reviews from press and end users which confirmed the potential of the foldable market. They are “planning to leverage the experience of having commercialized the Galaxy Fold to continue to introduce new products into the affordable lineup to maintain our leadership.”
  • They also commented that they are also focused on optimizing use of foldable apps and games to engage in active collaboration to identify new content, optimized for foldable devices and maximize the differentiated experience that users can gain from the Fold.
  • They also mentioned the disclosure of the compact foldable clamshell phone shown at the Samsung Developer Conference and will continue to focus on developing new form factors in the foldable category to expand their ecosystem and provide a new and creative mobile experience.
  • In Q4’19, they expect mobile earnings to decline on higher marketing expenses and slower sales of flagship models.
  • 2020 – Address product competitiveness and address growing 5G demand. Drive foldable sales growth, expand premium models and optimize operations for low-to-mid range models.
  • Continue to expand 5G coverage for its network business and emphasize 5G business in the US and Japan.
  • 5G smartphones for the industry are estimated from mid-to-low 100M to mid-to-high 200M.
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Written by

Ross Young