Samsung Q3’19 Guidance and OLED Results Preview

Published October 14, 2019

Samsung released its guidance for Q3’19 and is expecting its 4th straight quarter of a Y/Y revenue decline. In $US, revenues are expected to fall 11% Y/Y while rising 8% Q/Q to $51.9B. Revenues are rising for the 2nd straight quarter on a sequential basis, but are down Y/Y on much lower memory pricing. Operating income guidance was for a 14% Q/Q increase and a 59% Y/Y decline to $6.4B. Although operating income was 8% better than consensus, it is down significantly on lower margins in its semiconductor business which will likely remain its highest margin category. Company-wide operating margins are expected to improve slightly from 11.8% in Q2’19 to 12.4% in Q3’19 as the memory market begins to stabilize, but is well below the 27% earned in Q3’18 when semiconductor operating margins were 55%.

Samsung Electronics’ Financials

Samsung Electronics’ Margins by Division

We recently provided a preview to Samsung Displays (SDC) OLED performance in our Quarterly OLED Shipment Report where we showed:

  • SDC’s OLED revenues should rise 40% Q/Q in Q3’19 while falling 10% Y/Y;
  • Smartphones should account for 95% of their OLED revenues, up from 94% in Q2’19;
  • Rigid smartphone revenues are expected to rise 21% Y/Y while falling 2% Q/Q, accounting for a 36% share of SDC’s OLED smartphone revenues, up from 27% in Q3’18 but down from 51% in Q2’19.
  • Flexible/foldable OLED smartphone revenues are expected to be up 85% Q/Q, but down 21% Y/Y. They are expected to account for 64% of SDC’s OLED smartphone revenues, up from 49% in Q2’19, but down from 73% in Q3’18.
  • SDC’s OLED business is still significantly influenced by Apple’s highly seasonal flexible OLED demand. Apple’s demand is expected to have risen 254% Q/Q in Q3’19 to 25.5M panels, which would be down 15% Y/Y. Apple’s share of flexible/foldable OLED smartphone unit demand is expected to surge from 30% in Q2’19 to 58% in Q3’19, down from 62% in Q3’18. On a revenue basis, Apple’s share of SDC’s flexible/foldable OLED smartphone demand is expected to jump from 37% in Q2’19 to 64% in Q3’19, which is down from 70% in Q3’18.
  • Huawei was SDC’s 3rd largest flexible OLED customer in Q3’19 as it became the dominant supplier in the Mate 30 Pro. SDC’s volumes to Huawei are expected to nearly triple in Q4’19 with its share surging to 10% of SDC’s flexible/foldable output.
  • Samsung Galaxy is expected to account for 49% of SDC’s rigid OLED smartphone output with Huawei, Oppo, Vivo and Xiaomi each grabbing at least a 10% share.

SDC’s OLED Revenues and Growth*

Source: DSCC’s Quarterly OLED Shipment Report, *Q3/Q4’19 figures are preliminary

SDC’s Rigid vs. Flexible/Foldable OLED Revenue and Unit Share

Source: DSCC’s Quarterly OLED Shipment Report, *Q3/Q4’19 figures are preliminary

SDC’s Rigid vs. Flexible/Foldable Smartphone Panel Shipments

SDC’s Flexible/Foldable Smartphone Panel Shipments by Brand

Source: DSCC’s Quarterly OLED Shipment Report, *Q3/Q4’19 figures are preliminary​SDC’s Rigid

Smartphone Panel Shipments by Brand

Source: DSCC’s Quarterly OLED Shipment Report, *Q3/Q4’19 figures are preliminary

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Written by

Ross Young

Ross.Young@DisplaySupplyChain.com