A new report by FitchRatings is predicting Samsung’s display revenue is forecasted to increase by a low single digit in 2023 due to rising OLED adoption across various applications. However, operating margin is predicted to decline to 15%-16% from 17% due to higher production costs. This is probably a more optimistic assessment of the state of Samsung’s business and the margin of error may be higher because very little evidence exists to support outcomes, one way or another.
Samsung’s display business is a key player in the global display market and has a strong focus on research and development, driving its technology leadership in the industry. Samsung’s display business looks healthy for a number of reasons:
- Shift from LCD to OLED and Quantum Dot Technologies: Samsung has moved away from the liquid crystal display (LCD) manufacturing in China and Korea and has focused on quantum dot and OLED display panels, in line with the rising demand for these advanced display technologies.
- OLED Adoption: The rising OLED display penetration in the premium TV segment and IT products supports Samsung’s display panel business. OLED technology offers several advantages over LCDs, such as better color reproduction, higher contrast ratio, thinner and more flexible screens, and lower power consumption.
- Diversification of Product Offerings: Samsung’s display business has a diverse product portfolio that includes smartphone displays, TV panels, monitors, and other large-format displays. This diversification helps the company cater to a broader range of customer segments and minimize risks associated with market fluctuations in any single segment.
- Market Leadership: Samsung is one of the leading manufacturers of OLED displays and has a strong presence in the smartphone, tablet, and TV display markets. Its technology leadership and manufacturing capabilities have allowed the company to maintain a competitive edge over its rivals.
- Challenges: Despite its strengths, Samsung’s display business faces several challenges, such as higher production costs associated with OLED and quantum dot technologies, intense competition from other display manufacturers, and potential geopolitical risks that could affect supply chains and technology transfers.
- Future Growth Prospects: The display market is expected to grow in the coming years due to the rising demand for advanced display technologies and innovative devices, such as foldable smartphones, automotive displays, and AR/VR devices. Samsung’s continuous investment in R&D and manufacturing capabilities will help the company maintain its market leadership and capture new growth opportunities in these emerging segments.
We are in a post Q1 period when large companies are trying to set expectations for future performance and assuage investors. All bets are off in April numbers don’t meet lowered expectations. Problems rapidly escalate if May fails to create any sense of further optimism.
