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Samsung Electronics To Produce Mid-End Smartphones Integrated with OLED Displays
In anticipation of a slowdown in the growth of high-end smartphones, due mostly to a saturation of the market, Samsung decided to move its AMOLED production into the mid-range. Almost concurrent with the announcement by Samsung’s IR group, the Q4 shipment volume dropped Q/Q, evidence of the market change. Samsung Electronics confirmed that it would produce AMOLED panels for the mid-range smartphones and tablets in 2014 as opposed to recent rumors that they would be switching from AMOLEDS to TFT LCDs in the high-end market segment. According to our research, Samsung Display’s utilization rate on small/medium OLED displays took a dive in Q4; however, the company plans to revive its OLED business by diversifying customers and product segmentation.  Figure 1 shows Samsung’s view of the many benefits of using AMOLEDs.
Figure 1: SEC announced AMOLED Strategy in Smartphone
Source: SEC Analyst Day 2013
Samsung always believed that AMOLED costs would be less than TFT-LCDs but up to the present that has not been the case and Samsung Electronics has been reluctant to use OLEDs in the mid-range due to the price premium charged by Samsung Display (SDC). For instance, the popular 5.0-inch FHD LCD panel production cost is estimated at USD19 whereas the same size OLED display is close to 15% higher, USD22; however, the smaller size OLED panel production cost is expected to be close to the LCD panel level by Q2’14 and SEC is going to take advantage of the benefits and a more competitive pricing structure.
Figure 2: Production Cost Comparison of LCD and OLED
Source: DisplaySearch, OLED-A
SEC’s strategy is to target the mid-range, which is expected to have the fastest growth by differentiating its smartphones from the growing number of Chinese products by offering the OLED display. As opposed to new products, Apple entered India smartphone market by re-releasing the iPhone 4S series, but the company is also expected to release a lower cost product this year with a much more differentiated price structure then that available with the iPhone 5C and the iPhone 5S. Table 1 compares the Galaxy S Series 4 with the iPhone 4S, now being marketed in India.
Table 1: Galaxy S Series with 5.0" Panel Size vs. iPhone 4S
SEC will continue to emphasize premium smartphones with high quality OLED displays by offering a 5.0”~5.2” AMOLED and QHD (2560 x 1440) resolution at 560 ppi, 16MP rear camera and 3200mAh battery in 2014, while diversifying its OLED display capability. Apple will also be upgrading its high-end entry, but the largest market for smartphones is in China and then India and the battle for supremacy will likely lie in the mid-range and the lower cost Chinese models from Lenovo, Huawei Device, Xiaomi, ZTE and others.

( Updated: 2014-03-20 )
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