Over the last few weeks there have been reports that Apple is unlikely to make any major design changes during its upcoming flagship iPhone refresh due this fall, marking a departure from the two-year industrial design lifecycle to which it typically adheres. Instead, the company has plans for a complete design overhaul in 2017, with a device that could sport an edge-to-edge OLED display, among other enhancements. We believe that Samsung Electronics could be a big beneficiary of Apple’s changing design life cycle for two primary reasons, which are detailed below.
A Dated iPhone Design In 2016 Could Drive Customers Toward Samsung’s S7 & Note
If this year’s iPhone refresh is indeed based on the same industrial design, there is a strong possibility that upgrade-related sales to iPhone 6 and 6S customers will be low. Moreover, interest from Android customers could also decline given that the iPhone 6 design is already about two years old. This could steer customers seeking a more contemporary looking handset towards devices such as Samsung’s curved screen S7 Edge and the refreshed Galaxy Note, which is tipped to launch in the coming weeks. Samsung has already been a beneficiary of the recent weakness at Apple. For instance, as Apple saw iPhone sales decline for the first time during the last quarter amid weak uptake of the iPhone 6S, the first month sales of Samsung’s Galaxy S7 surpassed expectations, coming in at 3x that of the Galaxy S6.
Apple’s OLED Orders Can Provide Upside For Samsung Display From 2017
The completely redesigned iPhone due in 2017 is reported to sport an edge-to-edge OLED display, unlike previous iPhones which have typically favored LCD screens. Samsung, the world’s largest OLED supplier (260 million OLED panels shipped in 2015) is expected to be a big beneficiary of this shift. Digitimes Research estimates that Samsung Display could ship 40 million OLED units to Apple in 2017, with the number rising to 120 million units by 2019. This should potentially open up a new revenue stream for Samsung, since Apple currently uses LCDs sourced from Samsung’s rivals LG Display and Japan Display on the iPhone 6 series. At present, Samsung Display’s biggest OLED customer is Samsung Mobile, which is estimated to purchase about 239 million units in 2016. ((Digitimes Research: Samsung Display AMOLED shipments to increase to 560 million units in 2019, Digitimes, June 2016)) Below we estimate the potential revenues Samsung could garner over the next three years from an Apple OLED order.
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