_But wait there’s more!

_But wait there’s more! According to Taiwan-based Trendforce, while Samsung’s Note 7 termination will reduce overall smartphone shipments this year by ~6m units, Apple (AAPL) and Huawei (pvt) will be increasing their production by 3m units each to hopefully cover those Note 7 users who want to move to a new brand, none of which is surprising.  They go on to say that the increased production from others will put various components in short supply, such as DRAM, NAND, Flash , and OLED displays, pushing up prices.  Further, it is rumored that Samsung Display is already raising prices for OLED displays to help offset the losses caused by the Note 7.

Pricing for components have already been rising, and an increase in production of 6m units, offsetting an equivalent loss, should have a minimal effect on prices, other than with buyers who have been caught off guard by the whole issue, as display prices have been rising for the last few months, along with DRAM prices.  These price increases have had little to do with the recent Note 7 issues, so blaming Samsung, or the increased production of two brands for the increases seems a bit aggressive.  There will likely be some components that will be in greater supply than expected, as Samsung is unable to use those earmarked for the Note 7 (see above), but there should be only a few that would see increased demand relative to what was previously expected.  Good buyers should be able to make the deals necessary to meet any changes in order patterns, and if Samsung Display is raising prices on its small panel OLED displays, it has more to do with keeping pace with similar LCD small panel prices, which is part of the display pricing process, and has little to do with the Note 7 shortfall.

Looking at the numbers, and this is purely an example, using the output of Samsung’s smallest OLED line, which is a Gen 4.5 fab, they could produce 4.47m units/month, and looking at all of Samsung Display’s current OLED capacity, they should be able to produce 31.7m Note 7 size units each month.  While the loss of Note 7 sales and the lack of production of those units is a blow to both Samsung Display and Samsung Electronics, it is a small fraction of Samsung’s output.  More important is the idea that Samsung Display has been running its OLED fabs at nearly full capacity and has still been unable to meet demand, which is likely the reason for any price increases in OLED displays, particularly as Apple has no smartphones that use an OLED display.