Seoul [South Korea], October 26 (ANI): Samsung Electronics and Apple are cutting orders for smartphone components amid surging memory chip prices and pressure on profit margins, potentially threatening Samsung Display's fourth-quarter earnings, according to a report by The Korea Herald.

The report highlighted that Samsung Display derives nearly two-thirds of its revenue from the two smartphone manufacturers. Apart from this, Samsung's mobile division has asked suppliers to reduce fourth-quarter component deliveries by 20 to 30 per cent compared to earlier plans. 

'Samsung Electronics and Apple are scaling back orders for smartphone components as soaring memory prices squeeze margins, threatening fourth-quarter earnings at Samsung Display,' The Korea Herald said. 

Meanwhile, Apple has reduced October orders for certain iPhone 18 Pro and Pro Max components by 15 to 20 per cent, The Korea Herald reported, citing sources.

Notably, "The pullback comes during a period when flagship launches typically lift orders for high-end OLED panels." 

Also, Samsung generally reduces handset production ahead of its next Galaxy S launch, however, the latest reported cuts are "steeper than expected," it noted. 

Samsung Display is likely to face significant pressure from the order cuts, given its heavy dependence on the two smartphone makers. According to its 2025 audited financial statements, customer groups believed to be Apple and Samsung Electronics contributed 40.4 per cent and 22.4 per cent of its annual revenue, respectively. Together, they accounted for 62.8 per cent of total sales, amounting to 18.66 trillion won (USD 14.1 billion), it noted. 

'The bigger concern isn't necessarily how many fewer panels Samsung Display sells, but which panels it loses orders for,' an industry source said, adding, 'If the cuts fall heavily on premium iPhone models, the damage to operating profit could be disproportionately large, especially if factory utilization also starts to decline,' as per Korea Herald. 

The pressure stems from rising memory chip prices, as manufacturers shift production capacity towards more profitable server DRAM and high-bandwidth memory used in artificial intelligence (AI) data centres, pushing up costs for smartphone memory chips. 

Prices of LPDDR5X memory, widely used in smartphones, surged 78 to 83 per cent in the second quarter compared to the previous quarter, the report said citing market research firm TrendForce. Also, "The squeeze could extend to panel pricing." 

However, Apple's newly launched iPhone Duo, its first foldable smartphone, could provide some relief to Samsung Display. The device went on sale on Friday and features OLED panels supplied exclusively by Samsung Display, The Korea Herald noted in its report. (ANI)