What Did We Learn from Samsung Display’s Q4’18 Results

Published February 5, 2019

It was an unusual quarter for Samsung Display in that OLEDs suffered their largest Y/Y decline to date, while LCD margins improved significantly.

Samsung Display’s revenues fell 10% Q/Q and 20% Y/Y to $8.13B. The primary cause of the decline was a Q/Q double-digit reduction in rigid OLED smartphone panel shipments. Operating income fell a little faster than revenues, down 12% Q/Q and 33% Y/Y, due to a larger contribution from lower margin LCDs. Overall, operating margins remained flat at 11% due to a smaller contribution from low margin rigid OLEDs.


Samsung Display’s Revenues and Growth

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


Samsung Display’s Operating Income, Growth and Margins

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


By technology, OLED revenues fell 12% Q/Q and 21% Y/Y to $6.4B. It was the largest Y/Y decline to date for its OLED business as shown below. We believe a double-digit decline in rigid OLED shipments were the primary cause. On the other hand, LCD revenues rose 2% Q/Q while falling 14% Y/Y. It was the 2nd consecutive quarter of sequential growth for LCDs after 4 consecutive quarters of declines on stable prices and a richer mix of TV panels such as 8K and QLED TV panels. As a result, the OLED share of revenues fell from 81% to 78% with LCDs rising from 19% to 22%. For a complete breakdown of SDC’s OLED panel shipments by application, size, resolution and customer, see our Quarterly OLED Shipment and Fab Utilization Report.

With both rigid and flexible OLED fab utilization a concern and rigid OLED shipments down double-digits, OLED operating profits fell 22% Q/Q and 38% Y/Y to $759M. LCD operating profits on the other hand surged 846% Q/Q and 124% Y/Y to $105M, the highest since Q3’17 due to an increase in shipments of higher-end panels and its cost reduction efforts. As a result, OLED’s share of operating profits fell from 99% in Q3’18 to 88% in Q4’18. The LCD share of 12% was the highest since Q3’17. OLED OPMs only declined slightly, from 13% to 12%, as higher margin flexible OLEDs took share. LCD operating margins of 6% were the best since Q3’17. As our fab utilization data showed, rigid OLED fab utilization dropped each month as the price gap did not narrow with LTPS LCDs and brands were reluctant to single source high volumes with SDC. Rigid utilization bottomed in December, improved in January and is expected to improve further in February. It will also benefit from hole punch display availability in Q3’19.

SDC’s OLED Panel Revenues and Growth

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


SDC’s LCD Panel Revenues and Growth

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


SDC’s OLED vs. LCD Share of Operating Income

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

SDC’s OLED vs. LCD Operating Margins

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


Samsung’s capex in Q4’18 fell 77% Y/Y to $443M. It was the lowest quarterly capex figure in at least 5 years.

SDC’s Falling Capex

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


Looking forward to Q1’19, SDC expects market conditions to worsen as competition in the mobile phone industries intensifies amid a sluggish market. Management indicated a sizable decline in operating income was likely on slow sales of premium smartphones and increased price competition for rigid OLEDs with LCDs. For LCDs, ASPs will remain under pressure resulting from slow demand due to seasonal weakness combined with rising panel supply.

For 2019 for LCDs, they will continue to focus on delivering products with differentiated designs. Will focus on high resolution, 8K, and ultra large products. For OLEDs, they expect OLEDs to gain share through differentiated designs and functions. They will expand the OLED market by offering innovations for new applications, reducing dependency on smartphones. They will also be developing QD-OLEDs which are expected to begin production in 2020.

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Written by

Ross Young

Ross.Young@DisplaySupplyChain.com