A new report says that the supply of Apple’s iPhone 12 panels “heralds a new era of competition in OLED.”
A new Nikkei Asian Review report notes how LG is looking to Apple to help “chip away” at Samsung’s dominance of the OLED panel market. From the report:
Apple decided to equip this year’s lineup of iPhones entirely with OLED panels. LG Display, which has endured six consecutive quarterly operating losses, is expected to fulfill much of this extra demand. The company will supply 20 million OLED panels this year, or five times the volume from the previous year, a source said.
LG’s arrival heralds a new era of competition in OLED, the start of a battle for market share like the one that has prevailed in older liquid crystal displays.
As such, LG CFO Suh Dong-Lee seems confident LG’s finances will improve in the second half of 2020. As noted, LG has recorded six consecutive quarterly operating losses, so is in desperate need of a change in fortune. As Nikkei notes, Samsung has previously supplied the majority of OLED panels for iPhone, however, its order number rose only slightly to around 60 million units for this year. Currently, in the small and midsize OLED panel market, Samsung holds a market share of more than 80%.
One noted reason behind the shift from Apple to a more diverse OLED supply pool is steep charges it incurred to Samsung earlier this year after it failed to meet its obligated target of panel purchases, likely driven by lower-than-expected iPhone sales. The $950 million payment was enough to turn Samsung Display’s Q2 from a loss-making to a money-making quarter.
As one consultant notes, such an arrangement between the two is only possible because of Samsung’s “virtual monopoly on OLED supplies”. Apple reportedly tried to increase its reliance on LG last year, but the company couldn’t deliver:
Apple has long sought other OLED suppliers. LG Display panels appeared in some iPhone 11 models last fall. But in the summer prior, LG Display failed to improve the production yield rate of panels and fully meet delivery targets, an incident that reportedly enraged Apple’s procurement manager. Afterward, the South Korean company managed to improve its yield rate of OLED panels, multiple suppliers say.
Clearly, given the mammoth payments made to Samsung both this year and the year before, it is certainly in Apple’s best interests to try and restore some balance to OLED manufacturing and supply in smartphones. To this end, Apple is also reportedly tapping Chinese supplier BOE for OLED supply in next year’s iPhone.
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