Apple’s sales in China showed a year-on-year decline of no less than 27 percent in the fourth quarter of 2018 and the company recently lowered its sales forecast for the first quarter of this year. This is sending shock waves through the IT industry. The memory chip business of Samsung Electronics and SK Hynix is likely to be affected to a significant extent. LG Display, which is looking forward to a partnership with Apple, now has to compete with BOE with its initial order for supply to Apple continuously delayed.
The foundry market is fluctuating, too. The performance of TSMC, which is the only company supplying application processor chips to Apple, is deteriorating and its competition with Samsung is likely to intensify.
The mobile market is extremely important for memory chip suppliers. When it comes to DRAM chip demand, the market accounts for 31.7 percent, slightly lower than the server market’s 32.1 percent. This year, the global server market is facing serious inventory issues. Under the circumstances, the decreasing popularity of the iPhone is a serious concern on the part of memory chip suppliers. The global smartphone market showed its first negative growth last year with a year-on-year decrease of 4.1 percent in annual shipments. Besides, Apple is going to release 5G phones next year at the earliest with disputes going on between Qualcomm and itself over 5G modem chip supply.
At present, approximately 41 percent of the DRAM chips Apple uses are estimated to be from Samsung. The estimates are 31.2 percent and 23.5 percent for SK Hynix and Micron Technology, respectively.
Samsung is ambivalent in its relationship with Apple. For example, a decrease in iPhone sales volume has a negative impact on Samsung’s memory chip and display business units whereas it is good news for Samsung’s smartphone business unit. In addition, it can be a boon to Samsung’s foundry business unit, which supplies the Exynos mobile application processors for Galaxy phones, in that TSMC is the sole application processor chip supplier to Apple. Smartphone-related sales currently represent 60 percent of TSMC’s total sales and the Taiwanese company’s performance is predicted to deteriorate due to a decline in demand from Apple. With Chinese smartphone manufacturers such as Huawei and Xiaomi growing fast, Apple’s slump in China may be more rapid than thought, and then TSMC cannot but resort to new clients. This is why competition between Samsung and TSMC is likely to intensify.
LG Display and BOE, in the meantime, are aiming to supply their mobile OLED panels to Apple. LG Display previously anticipated its first order in the fourth quarter of 2018, yet it is unlikely to be placed until the second half of this year with the smartphone market going down. Meanwhile, BOE has further refined its technology and become the sole supplier of display panels for use in Hauwei’s flagship P30 Pro. Both LG Display and BOE are currently trying to diversify their business from LCD and the global display market can be significantly changed depending on which one will supply OLED panels to Apple.