Chip Price Surge: Samsung and Apple Slash Component Orders
Samsung and Apple are slashing smartphone component orders as memory chip prices soar, putting Samsung Display's Q4 earnings at risk.
In a move that has sent ripples through the tech supply chain, industry giants Samsung Electronics and Apple are scaling back their orders for smartphone components. This strategic pullback comes as a direct result of soaring memory chip prices, which are squeezing profit margins and threatening the financial outlook for key suppliers, most notably Samsung Display.
The Memory Chip Crisis
The root of the problem lies in a shift within the semiconductor industry. Memory chip manufacturers are increasingly pivoting their production capacity away from smartphones and toward more lucrative sectors. Specifically, there is a massive push toward server DRAM and high-bandwidth memory designed for artificial intelligence (AI) data centres.
This shift has caused a dramatic spike in the cost of smartphone-grade memory. According to data from market research firm TrendForce, the prices of LPDDR5X memory—a staple in modern smartphones—surged by a staggering 78 to 83 per cent in the second quarter compared to the previous one.
Major Cuts in Production
The impact of these rising costs is evident in the revised order sheets of the two tech titans:
- Samsung Electronics: The mobile division has instructed its suppliers to reduce component deliveries for the fourth quarter by 20 to 30 per cent compared to original projections. While Samsung typically lowers production before a new Galaxy S launch, analysts note that these current cuts are significantly steeper than expected.
- Apple: The iPhone maker has reduced its October orders for specific components destined for the iPhone 18 Pro and Pro Max by 15 to 20 per cent.
This reduction is particularly surprising as it occurs during a period when flagship launches usually trigger a surge in orders for high-end OLED panels.
Samsung Display in the Crosshairs
The most vulnerable entity in this scenario is Samsung Display. The company relies heavily on these two clients for its survival. Based on 2025 audited financial statements, customer groups identified as Apple and Samsung Electronics contribute 40.4 per cent and 22.4 per cent of its annual revenue, respectively.
Combined, these two companies account for 62.8 per cent of Samsung Display's total sales, totaling approximately 18.66 trillion won (USD 14.1 billion). This extreme dependence means any reduction in orders from either party has a disproportionate impact on the bottom line.
The Risk to Profitability
Industry insiders suggest that the total volume of panels sold is less concerning than the type of panels being cut. If the order reductions hit premium iPhone models the hardest, the damage to operating profits could be severe, especially if factory utilization rates begin to drop.
A Glimmer of Hope: The Foldable Factor
Despite the gloomy outlook for traditional slabs, there is a potential silver lining. Apple's recently launched iPhone Duo, the company's first foray into the foldable smartphone market, may provide some financial relief. The device, which went on sale last Friday, utilizes OLED panels supplied exclusively by Samsung Display, offering a new revenue stream to offset the losses in other segments.