Apple reportedly getting 2nd supplier for Oled screens

A deal with LG would reduce Apple's dependence on rival Samsung for the supply of Oled screens, used in Apple's iPhone X.
A deal with LG would reduce Apple's dependence on rival Samsung for the supply of Oled screens, used in Apple's iPhone X.PHOTO: AGENCE FRANCE-PRESSE

TOKYO • Apple is close to getting its first batch of organic light-emitting diode (Oled) screens from South Korea's LG Display Co, according to people familiar with the matter, a key step in the US company's push to reduce iPhone costs and its dependence on Samsung Electronics Co.

The initial volume will likely be between two million and four million units, small relative to Apple's sales, as LG continues to work on ramping up capacity, said one of the people, who asked not to be identified because the matter is private.

That would, however, help Apple gain leverage in price negotiations with Samsung, the sole supplier of Oled displays for the iPhone X and Apple's primary rival in smartphones.

The expense of that component is a key reason iPhone X pricing starts at US$1,000 and sales have not met initial expectations.

A successful supply deal would help both Apple and LG. The Cupertino, California-based company would be able to buy significant volumes from LG for next year's iPhone model, as it tries to fight off a slump in smartphone sales. LG needs a fresh source of revenue as it battles a slide in the price of liquid crystal displays (LCD).

"Securing a second supplier for Oled screens is crucial for Apple as it will allow the company to reduce its reliance on Samsung, which is currently the sole supplier," said Mr Jerry Kang, a senior principal analyst at IHS Markit.

"At the same time, it will help accelerate a broad adoption of Oled screens. More suppliers means more volume, and in turn, lower pricing."

The first Oled screens from LG will be used in one model of the new iPhones slated for release this year, the people said.

LG wants to supply all the screens for that model, though it is not clear it can yet achieve that, one of the people said. The shipment is subject to two layers of approval, the first of which is expected around next month, they said.

Apple plans to release a trio of smartphones later this year, including two with Oled screens, Bloomberg News reported earlier this year.

The latest move does not indicate Apple is aiming for adoption of Oled screens for all of its iPhones next year and is more about diversifying its suppliers, one of the people said.

LG Display has been investing billions of dollars in the next-generation technology, which boasts more accurate colours and a thinner structure than LCDs. But it has fallen behind Samsung in signing a deal to supply screens for Apple's Oled iPhones, as it maintained momentum in developing larger-sized screens.

Apple is also in discussions with China's BOE Technology Group Co to supply Oled displays for iPhones, Bloomberg News reported in February.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on June 29, 2018, with the headline 'Apple reportedly getting 2nd supplier for Oled screens'. Print Edition | Subscribe