To Cut Production Costs
Samsung Electronics shipped more LCD panel smartphones than OLED panel models in 2021. The former are relatively cheaper than the latter. As a parts shortage continued around the world, the Korean smartphone giant adopted a cost-cutting strategy to cope with expected smartphone price hikes, analysts say.
Samsung Electronics shipped 135.8 million LCD smartphones and 135.1 million OLED smartphones in 2021, according to market research firm Omdia. Compared to the previous year, LCD smartphone shipments grew by about 41 percent while OLED model shipments slid by about 15 percent.
Samsung's profitability improved as a result of ramping up shipments of LCD smartphones. In 2021, its LCD smartphone sales revenue reached about 4.23 trillion won, up 740 percent from about 503 billion won in the previous year. During this period, the proportion of LCD smartphones in the 100,000 won to 500,000 won range climbed to 68.7 percent. On the other hand, sales of OLED smartphones amounted to about 10,137 billion won, down 3.9 percent from a year earlier.
Since 2010, Samsung Electronics has been playing a leading role in driving the growth of the OLED smartphone market. It expanded the use of OLED panels from premium smartphones to budget products. Apple and Chinese manufacturers followed suit.
Yet, Samsung Electronics scaled up LCD smartphone shipments in 2021 due to a cost reduction trend, analysts say. The prices of smartphone components, including application processors (APs), integrated circuits (ICs), and 5G mobile communication modem chips, soared in 2021.
A tightening OLED panel supply also played a role. Analysts say that the global supply of rigid OLED panels has recently reached its limit. The proportion of smartphones equipped with rigid OLED panels is on a gradual decline. Small and medium-sized OLED panels are largely divided into flexible OLED panels installed in premium smartphones and rigid OLED panels for budget smartphones.
Analysts predict that the OLED smartphone market will slow down in 2022 unlike previous years. The proportion of OLED adoptions by smartphone companies stood at 42 percent in 2021, up 10 percentage points from 2020, according to Counterpoint Research. However, the percentage is expected to grow only by 2 percentage points in 2022.