Chinese Smartphone Makers Plan for Mini LED Supply as Apple Expected to Control Majority of OLED Production This Year

Apple's domination of the OLED supply chain is one of the reasons why three Chinese smartphone makers are seeking out alternative display technology in future handsets, according to a report today by DigiTimes.

Huawei, Oppo, and Xiaomi are planning to adopt mini LED-backlit panels in smartphones launched later in 2018. The three companies believe that Apple "may extend use of AMOLED panels" to iPhones coming in 2018 and occupy even more of Samsung Display's production of the OLED displays.


Apple's entry in smartphone OLED displays began with the manufacturing of the iPhone X last year and is expected to increase in 2018 with the second-generation iPhone X and 6.5-inch "iPhone X Plus," which should lead Apple to significantly increase OLED display orders thanks to the larger size. The company has also implemented OLED displays into the Apple Watch.

Instead of attempting to fight for OLED display supply against Apple, the China-based smartphone makers are turning towards mini LED this year. The companies have reportedly asked Taiwan-based suppliers to begin producing mini LED backlighting in June 2018 in anticipation of products that would debut in the second half of 2018. Industry sources noted that technological advances in mini LED product designs have the potential to cut production costs, further boosting the smartphone makers' readiness to adopt the technology.

Besides Samsung Display, a report earlier in the month suggested that Apple will add LG Display to its OLED supply chain to help build 6.5-inch panels for the iPhone X Plus. Samsung was the sole OLED supplier for the iPhone X in 2017, and it's predicted that the company will increase supply of OLED panels to Apple with between 180 and 200 million OLED displays in 2018 (for the 5.8-inch device), up from an estimated 50 million in 2017.

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iPhone X Plus Should Lead Apple to Significantly Increase OLED Display Orders Next Year

Samsung Display will supply Apple with between 180 and 200 million flexible OLED displays for the iPhone in 2018, up from an estimated 50 million this year, according to The Korea Herald's sister publication The Investor.

While the report focuses on the iPhone X, it's likely that a portion of the OLED displays will go towards the "iPhone X Plus" rumored to launch alongside the second-generation iPhone X in the second half of 2018.


Like the Galaxy Note 8, the iPhone X Plus is expected to have a 6.4-inch display, but its overall physical size will likely be closer to an iPhone 8 Plus. Meanwhile, the next iPhone X will likely retain its 5.8-inch display.

With both a full year of iPhone X sales and the addition of the iPhone X Plus to the lineup in 2018, Apple will undoubtedly need many more OLED displays, so today's report about Samsung quadrupling its production next year makes sense. Samsung could reportedly gain an extra $22 billion in revenue from the orders.

The report also claims Samsung has achieved around a 90 percent yield rate, compared to around 60 percent earlier this year, meaning it is getting more efficient at making OLED displays that live up to Apple's strict quality standards. This could lead to improved shipping estimates for next year's launch.

The new iPhone X and iPhone X Plus will likely launch around the usual timeframe of September to October, potentially alongside a new 6.1-inch mid-range model with an LCD display that is predicted to start at around $649 to $749.

There's no word on how much the iPhone X Plus could cost yet, but given the iPhone X starts at $999, the larger version should have a four-digit price tag. Apple charges a $100 premium for other Plus-sized iPhones, so it's possible the iPhone X Plus could start at around $1,099, but it's too early to say.

Apple is likely to remain dependent on Samsung for supply of OLED displays next year, but the company is reportedly investing billions into LG building OLED display production lines dedicated to the iPhone by 2019.

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More Smartphone Vendors Likely to Adopt OLED Panels if Burn-in Issue Can Be Solved

OLED panels are expected to penetrate up to 30 percent of the smartphone display market by 2018 through increasing adoption by smartphone vendors, according to industry sources (via DigiTimes).
The supply of OLED panels will remain constrained in the first half of 2018 as Samsung Display will continue to be the sole supplier that can mass-produce the panels, while rivals including LG Display, Japan Display (JDI) and Sharp may start volume production of OLED panels in the second half of 2018 at the earliest, indicated the sources.
Tellingly, that penetration rate could climb higher if the burn-in issue related to OLED panels could be solved, according to cited sources. Multiple reports surfaced in October about potential screen burn-in or image retention issues with Google's new Pixel 2 XL smartphone.

For its part, Apple says the iPhone X has been engineered to be the "best in industry" at reducing burn-in effects, but a support document published by Apple suggests burn-in is still a problem that some users could potentially see over time.

Apple will launch a trio of new iPhone models in 2018, including 5.8-inch and 6.5-inch models with OLED displays and a 6.1-inch model with an LCD display, according to respected KGI Securities analyst Ming-Chi Kuo.

Apple has reportedly also expressed interest in buying advanced LCD panels from Japan Display for use in some of its iPhones next year. OLED displays offer sharper contrast and brighter colors than traditional LCD panels, but cost and supply issues are an ongoing concern for Apple, and are likely to slow down any full transition to the technology.

Japan Display's advanced LCD panels, which it calls Full Active LCDs, are said to match or exceed some of OLED's advantages at a lower cost, and Apple is interested in procuring them for use in at least some iPhones set to debut in its 2018 smartphone line-up, according to The Wall Street Journal.

Meanwhile, supply constraints of OLED panels are providing current TFT-LCD makers with additional time to seek alternatives to further strengthen their competitiveness, said DigiTimes' sources.

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Samsung Expected to Earn $4B More Making iPhone X Parts Than Galaxy S8 Parts

Samsung looks on course to earn around $4 billion more in revenue making parts for the iPhone X than from the parts it makes for its own flagship Galaxy S8 handset, according to new research revealed on Monday.

An analysis conducted by Counterpoint Technology for The Wall Street Journal based its prediction on projected sales in the 20 months after the new iPhones go on sale November 3. According to CounterPoint, the reason for the chosen time window is that the majority of sales for a new smartphone typically occur in the first 20 months after its debut.

Counterpoint expects Apple will sell 130 million iPhone X units, earning Samsung $110 on each through the summer of 2019, while Galaxy S8's global sales are expected to be 50 million, earning Samsung $202 each from components such as displays and chips in its first 20 months of sales, according to estimates based on a projected bill of materials. The Counterpoint analysis includes parts sales from Samsung Electronics plus two Samsung affiliates that make batteries and capacitors.
Apple and Samsung are expected to be the world's two most profitable companies in 2017, excluding Chinese banks, according to S&P Global Market Intelligence. Samsung's components operation stands to make billions of dollars supplying the OLED screens and NAND flash memory chips for the new iPhone. Meanwhile, Apple hopes its new iPhone 8 and iPhone X range will boost its smartphone sales, which accounted for two-thirds of the company's $215.64 billion revenue in fiscal 2016, according to investment bank CLSA.

WSJ reports that Apple and Samsung's close association can be traced back more than a decade to when Lee Jae-yong — the grandson of Samsung's founder — personally negotiated with Apple co-founder Steve Jobs to provide flash memory for iPods, according to people familiar with the matter.

That enduring relationship has strengthened in recent months, but mostly out of pure necessity. Samsung is one of only a small number of semiconductor makers that can make large amounts of NAND flash memory, and remains the only significant manufacturer of the OLED displays adopted by Apple for the iPhone X, tightening the dependence of the two companies on each other.
At meetings, Samsung executives are known to tell attendees who pull out iPhones: "It's OK. They're our best client," according to people familiar with the matter.

Samsung employees often refer to Apple with code names. One of the most popular is "LO," short for "Lovely Opponent," people familiar with the matter said. Apple's descriptor for Samsung, meanwhile, is Samsung, according to people with knowledge of the situation. Employees at the iPhone maker are often critical of its rival's devices, pointing out software and hardware flaws behind closed doors.
The business relationship, however, hasn't been without its ups and downs. In 2011, Apple sued Samsung over alleged patent infringement of its smartphones, leading Samsung to counter-sue with its own infringement allegations. Steve Jobs famously called the dispute – which remains unresolved to this day – a "thermonuclear" legal war.

KGI Securities analyst Ming-Chi Kuo has claimed OLED iPhone panel supply is "controlled wholly by Samsung", which may have contributed to the $999 iPhone X's high price. In a bid to reduce its dependency on Samsung parts going forward, Apple has recently encouraged OLED production by rival suppliers like Sharp and Japan Display, while also pursuing alternative sources of NAND flash, most recently by agreeing with Bain Capital and others to acquire Toshiba's chip plant in a deal reportedly worth $17.7 billion.

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Tags: Samsung, OLED

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Apple Reportedly Investing Billions in LG to Make OLED Displays for Future iPhones

Apple is widely expected to introduce its first iPhone with an OLED display later this year, after a decade of using solely LCD technology.


Earlier reports peg Samsung as the exclusive supplier of OLED displays for the high-end smartphone, as the only company that can reliably produce both the quantity and quality of panels that Apple demands.

That could change within a few years, however, as Apple has decided to invest 3 trillion won/$2.67 billion in LG's OLED production for smartphones, according to The Investor, citing a Korea Economic Daily newspaper report.

Apple will reportedly make the investment as advance payment for the planned OLED display supplies from the Korean display maker. The iPhone maker is said to secure 45,000 panels per month for future iPhones from 2019.

Apple always aims to diversify its supply chain in order to secure lower prices and reduce the risk of relying on one supplier, so it's easy to see why the iPhone maker appears to be willing to help LG ramp up OLED display production.

Reports about Apple's potential investment first surfaced earlier this month, after the companies allegedly tentatively agreed upon the investment plans, and it now appears that a deal has been or is nearly finalized.

LG is likely to build a production line dedicated to iPhone orders only, as part of its agreement with Apple, according to The Investor.

It is frequently rumored that Apple will introduce a trio of new iPhone models later this year, including iterative iPhone 7s and iPhone 7s Plus models with LCDs and the so-called "iPhone 8" or "iPhone X" with an OLED display.

Rumors suggest Apple could switch to OLED displays for its entire iPhone lineup by 2019, potentially lining up nicely with LG's production readiness.


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LG Display Plans $13 Billion OLED Investment Over Next Three Years

Earlier in July, a report by The Korea Herald suggested that Apple and supplier LG Display were working on a deal that would see Apple investing $1.75-2.62 billion into LG Display's OLED manufacturing, specifically a plant that would be exclusively devoted to Apple orders. Today, Reuters has provided a few more details on LG Display's plans to enter the OLED display market for smartphones, which rival Samsung Display currently dominates.

In total, LG Display plans to invest $13.5 billion into boosting its output of OLED screens over the next three years, covering TV screens and specifically hoping to "make inroads against rival Samsung in smartphone displays." LG Display is already the OLED leader in large-screen television displays, but now the supplier is said to be seeking a strong foothold in the OLED screen market for smartphones, coming in the wake of OLED-backed iPhone 8 rumors and Apple's reported plans to go OLED-only on iPhones beginning in 2019, and perhaps even 2018.


LG Display will invest around $4.5 billion for a new production line that will create flexible OLED panels to help bolster its position in the auto display and smartphone market, and another $2.5 billion will be saved for another line of "large-size OLED screens." In regards to lines dedicated to small and mid-sized OLED displays, it's said that Apple will help out with getting the lines up and running, continuing the investment rumors began earlier this month.
Around 5 trillion won is earmarked for a new line for flexible OLED aimed at bolstering its position in auto displays and smartphones while 2.8 trillion won will go toward a separate new line for large-size OLED screens. Both production lines will be located in Paju, northwest of Seoul. Its planned 15 trillion won investment over three years implies an average of 5 trillion won in capital spending per year, above its usual 4 trillion won, but analysts said it will probably not be enough.

"For small and mid-sized OLED, it is expected to receive additional investment from somewhere else, perhaps Apple," said Lee Min-hee, analyst at Heungkuk Securities. "One production line for small and mid-sized OLED can require nearly 10 trillion won in investment. LG doesn't have the firepower to single-handedly build a lot of OLED production lines."
Apple's current OLED deal with Samsung will see the manufacturer supply 92 million OLED panels over the next two years. In The Korea Herald's report from early July, it was rumored that LG Display's OLED output for Apple would gear up in 2019, aligning with the end of Apple's contract with Samsung. A rumor this week has also pointed towards Apple's plans to develop its own OLED technology to reduce its reliance on suppliers like Samsung Display.

Apple's launch of the first-ever OLED iPhone is widely expected to be coming later this fall, in the majorly redesigned "iPhone 8," while more iterative updates in the "iPhone 7s" and "iPhone 7s Plus" will receive traditional LCD screens.


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Apple Buys Specialist Machinery to Set Up OLED Panel R&D Line in Taiwan

Apple has acquired specialist machinery from Sunic System to build its own OLED panel research and development line in Taiwan, according to a report on Monday.

Korea-based Sunic manufactures systems for OLED display production and supply for both pilot and mass production lines. According to ET News, Apple has purchased chemical vapor deposition (CVD) machines from the company to reduce its reliance on Chinese suppliers as it ramps up its R&D into OLED panel and related technology.


CVD is a technique for the fabrication and synthesis of thin films of polymeric materials, which have a broad range of application, including the production of OLED panel coatings with barrier properties.

Japanese Canon Tokki is currently the primary supplier of CVD machines and is said to ship the bulk of its output to Samsung, the biggest producer of OLED panels, but Apple's acquisition of the machines from Sunic could undermine Canon Tokki's dominant position in the CVD market going forward.
Samsung has bought five sets of OLED manufacturing equipment from Canon Tokki so far in 2017 and has signed contracts to buy five out of 10 such machines to be rolled out by the Japan-based machinery company in 2018, said the Commercial Times.
Samsung's own CVD purchases likely feed into its plan to construct the world's biggest OLED display manufacturing plant, which could begin mass production in 2019.

Apple has reportedly signed a two-year contract with the Korean company for the supply of up to 92 million curved OLED panels, at least some of which are expected to be used in this year's redesigned iPhone, variously referred to in the media as "iPhone 8", "iPhone Pro", and "iPhone X".

Apple is thought to be offering the OLED iPhone as a premium option alongside typical upgraded "S" cycle iPhone 7 handsets that will retain LCD displays. Rumors suggest that all iPhones in Apple's line-up could come with OLED displays by 2019.

Today's report suggests Apple is accelerating its research into bespoke OLED technology with the aim of eventually reducing its heavy reliance on Samsung in years to come, although whether it would actually manufacture its own OLED panels is unclear. LG has also reportedly purchased two CVD machines from Canon Tokki and has begun shipping OLED panels to Xiaomi and Google, and although LG's panels have not yet been validated by Apple, the two companies are said to be negotiating an OLED supply deal in time for 2019.

(Via DigiTimes.)

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Tag: OLED

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Apple Reportedly Investing in LG Display’s New OLED Plant, Will Be Solely Devoted to iPhones

While Samsung remains the world's the dominant supplier of OLED panels and will supply Apple with up to 92 million OLED screens over the next two years, a new report today suggests that Apple is looking to diversify its supply chain by investing $1.75-2.62 billion into LG Display's OLED manufacturing. Specifically, Apple and LG Display are said to be considering a deal that would funnel Apple's investment into LG Display's new "E6" OLED plant, which would be "exclusively dedicated to Apple orders" (via The Korea Herald).


LG Display's production on OLED screens is still far off, with its output for Apple predicted to start sometime in early 2019, which still places Samsung as the reigning supplier of OLED components for Apple over the next few years. No deal between Apple and LG Display is confirmed yet, with the companies having "tentatively" agreed upon the investment plans and more finalized details expected to come later in the month.
Apple is reportedly in talks with LG Display to invest about 2 to 3 trillion won (US$1.75-2.62 billion) into the Korean display maker’s new OLED production lines exclusively dedicated to Apple orders.

“Samsung Display is the only display maker that meets Apple’s strict quality criteria for now,” said an industry source on condition of anonymity. “LG Display is said to be meeting about 70 percent level of the requirements, while Chinese display makers are still struggling to catch up with that of LG.”
For the 2017 line of iPhones, rumors have been pointing towards the "iPhone 8" as having an OLED screen, while the iPhone 7s and iPhone 7s Plus will include standard LCD panels. The iPhone 8 is believed to include a 5.8-inch edge-to-edge display, glass body, wireless charging, no physical Home button, and potentially 3D sensing features for facial recognition.

A report out of Korea earlier this year stated that Apple aims to make every iPhone with an OLED screen by 2019, which would fall in line with today's report of Apple's and LG Display's deal being eyed for a 2019 production ramp-up on OLED screens.


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Samsung Planning to Build World’s Largest OLED Display Factory

Samsung Display is planning to construct the world's biggest OLED display manufacturing plant, with more than 30 percent higher production capacity than the company's current biggest factory, according to Korean website ETNews.

"iPhone 8" mockup designed by Benjamin Geskin for iDrop News

The report, citing unnamed industry sources, suggests the tentatively named A5 factory could begin mass production in 2019, with a peak yield of between 180,000 and 270,000 display panels per month.

Samsung Display has reportedly also been expanding its existing A3 plant since the second half of 2015 in order to fulfill demand for OLED displays from both its sister company Samsung Electronics and Apple.

Apple is widely rumored to release its first iPhone with an OLED display, known as the "iPhone 8" for now, later this year. Reports claim Apple has ordered between 70 and 92 million OLED panels from Samsung for the device.

An earlier report out of Korea claimed Apple aims to switch its entire iPhone lineup to OLED displays by 2019.


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Ming-Chi Kuo Agrees iPhone 8 Will Launch in September With ‘Severe’ Shortages Due to Delayed Production

As more alleged design schematics and dummy models of the "iPhone 8" leak online, one of the biggest questions remains the smartphone's actual launch date. Although some industry sources believe the tenth-anniversary iPhone will still launch in September -- perhaps in very short supply -- Japanese site Mac Otakara earlier this year suggested the OLED iPhone 8 would launch "very much" behind the the LCD models.

Today, KGI Securities analyst Ming-Chi Kuo has published a report supporting the theory that Apple will debut the OLED iPhone in September, but the device will face "severe supply shortages" for some time. Kuo believes that production ramp-up on the OLED iPhone model won't begin until as late as October-November, two months later than previous ramp-ups in August-September. Similar delayed production rumors have been circulated by Bloomberg, analysts from Barclays, and Brian White.


Kuo believes that this delay "won't undermine actual demand," as long as the iPhone 8 lives up to the hype, but the heaviest demand might be pushed back until as far as the first quarter of 2018, when the bulk of users could get their hands on the device according to Kuo.
Production ramp up of OLED iPhone could be delayed to October-November (previously estimated to be August-September, as in previous years). That said, if new features, such as 3D sensing, can provide good user experience, a temporary supply shortfall won’t undermine actual demand, which may be deferred to 1H18. In that case, potential contribution starting late-2Q17 from OLED iPhone could be partially delayed by 3-6 months for related suppliers.
This delayed production ramp-up is listed by Kuo as a "potential downside risk to shipments" of all three iPhone models believed to launch this year, with a second risk coming from Apple's competitors. Samsung, Huawei, OPPO, Vivo, and Xiaomi are all gearing up to launch "high-end full-screen smartphones" in 2017, and all could have an impact specifically on the LCD models of the 2017 iPhone, according to Kuo, because those models "do not have full-screen form factors."

Because of these potential risks affecting the iPhone's shipments this year, Kuo adjusted shipping estimates for the device accordingly. The analyst believes that the "worst case scenario" could see iPhone shipments decrease by 15 to 20 percent and result in 80 to 90 million units shipped, versus a previous estimate of 100-110 million units (a 60:40 weighting is placed for the OLED and LCD iPhone models). Ultimately, Kuo said that, "We see a higher probability of the worst case scenario coming to pass."

Production delays in this year's OLED iPhone are again sourced from the device's intricate manufacturing processes, thanks to numerous upgrades including its customized OLED panel, new 10-nanometer A11 processor, all-new 3D Touch module, substrate-like printed circuit board, and 3D sensing. Despite these production difficulties, Kuo said that the iPhone 8's announcement and launch time of the new iPhones will remain similar to previous years, suggesting the usual September iPhone event from Apple.
While we believe the announcement and launch time of the new iPhones will be similar to previous ones, production ramp up of OLED iPhone could be delayed to as late as October-November compared to the usual ramp up period of August-September, due to increased production difficulty. In other words, severe supply shortages may persist for a while after the new models are launched, capping total shipments of new iPhones in 2H17.
Kuo also sees a potential loss of appeal by high-end users on the LCD versions of the new iPhone models, due to their lack of a full-screen design, contributing to Apple's potentially weak shipping momentum for the iPhone later this year in addition to the worst case scenario for the OLED model.

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Tags: Ming-Chi Kuo, OLED

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