As tech’s geekerati prepare for the launch of the iPhone 12 later this year, Apple continues to leverage the supply chain both to improve the iOS-powered smartphone and to reduce Apple’s business costs. Once more the battleground is the display, and once more Apple has manoeuvred two suppliers into the same space.
“LG Display’s contribution is five times the volume from the previous year, according to a new Nikkei report. That’s big news for a division that has endured six consecutive quarterly losses, and LG Display believes this will improve its finances considerably in the second half of the year as its OLED panel factories begin to operate at full capacity.”
Having two suppliers for a key component such as the display will no doubt see Apple benefiting from competitive pricing as LG and Samsung pitch for more work on subsequent models. It also spreads the risk of supply issues; having seen the impact of some suppliers shutting down due to Covid-19 earlier this year this is a sensible precaution.
It’s also worth looking at this move with some hindsight.
First of all, LG Display picked up a small order from Apple last year, no doubt allowing Tim Cook and his team to assess the capabilities of quality of the displays while in full production.
Secondly, it has been widely reported that Apple’s lower sales of the iPhone 11 family last year meant that it missed the minimum purchase order clause of its contract with Samsung, incurring a contractual ‘make it up’ payment. With sales already down 25 percent across the board in the world’s smartphone market, predictions on the final sales of the iPhone 12 family are more volatile than usual.
Presumably reducing the order from Samsung reduces Apple’s exposure in the event of another weaker than expected year.
The four members of the iPhone 12 family are expected to be revealed in Apple’s traditional early September event, which could be as early as September 8.