Apple struggles with effort to diversify display suppliers, can’t manage to cut dependence on rival Samsung’s screens

“Apple Inc.’s efforts to line up a second supplier for its high-end smartphone screens — and reduce its dependence on Samsung Electronics Co. — have hit a hurdle because LG Display Co. is struggling to make them, according to people familiar with the matter,” Yoko Kubota and Takashi Mochizuki report for The Wall Street Journal. “South Korea’s LG Display is working to boost production of organic light-emitting diode displays in hopes that it can provide some of the screens for iPhones set to be released later this year, the people said.”

“However, manufacturing problems have caused LG to fall behind the schedule that many suppliers follow before beginning mass production for iPhones, which usually starts around July, the people said,” Kubota and Mochizuki report. “As a result, opinions within Apple are divided on whether LG Display can become a second source of OLED displays for the upcoming iPhones, one of the people said.”

“The Samsung-made OLED display is among the most expensive components in the iPhone X, costing Apple about $97 out of $376 in total estimated cost per device, according to an analysis by Fomalhaut Techno Solutions, a Tokyo-based consultancy,” Kubota and Mochizuki report. “Apple’s reliance on a single supplier for the screen means it has less bargaining power over its pricing—one reason for the iPhone X’s steep $999 price tag, analysts said.”

“LG Display was recently ordered by Apple to go through a third round of prototype production for the OLED smartphone screens, an extra step that most suppliers don’t go through for many components, the people said,” Kubota and Mochizuki report. “It currently is expected to supply as much as 20% of OLED displays for this year’s new iPhones, according to supply-chain analysis by Susquehanna International Group. Samsung is expected to supply the other 80% and could supply more should LG Display’s production capabilities fall short.”

Read more in the full article here.

MacDailyNews Take: Hopefully, LG Display see some real success so Apple can cut their dependence onthe slavish copier Samsung and diversifiy suppliers thereby increasing competition and driving down prices/maintaining strong margins.

SEE ALSO:
LG Display to produce 6.5-inch OLED displays for next-gen 6.5-inch iPhone as Apple diversifies OLED suppliers – January 3, 2018
LG Display reportedly in OLED supply deal with Apple for iPhone X – December 7, 2017
Apple teams up with LG Display for foldable iPhone due to concerns over tech leaks to Samsung – October 11, 2017
Apple, LG Display discuss OLED display deal for 2019 – September 7, 2017
LG Display to supply OLED panels to Apple – July 31, 2017
Apple to invest $2.70 billion in LG Display’s OLED production – July 28, 2017
Apple and LG Display plan to derail Samsung’s OLED expansion plans – July 25, 2017
LG Display to invest $3.56 billion in flexible OLED plant – May 30, 2017

8 Comments

    1. Apple likely discovered all the same messes that stopped Foxconn from taking over Sharp three years ago.

      While vertical integration seems like an obvious good use of capital especially for companies like Apple that don’t even know what to do with their insane loot, Timmy just seems interested in subscription services today. No surprise Apple can’t stay ahead in product capability when it chooses all the same component suppliers as any other electronics house.

  1. I hope Apple stop struggling to stick to OLED for a small gadget like smartphone. Sure they need to promote it as the latest feature and keep higher price, but today’s LCD (the latest advancement. Forgot the name of it) is plenty excellent. If Apple has to rely on a single supplier and still struggling, is it not a wise business decision particularly when the sole supplier (for now) is their biggest competitor (and less than honest)?
    It’s just 4 to 6.5 in. size tiny screen and I will take the latest advancement of LCD any day without giving up any more unnecessary $ to Apple. If it’s iPad size and up (iMac, laptop etc), sure the OLED might begin to make sense but for smartphones? Gamers, movie watchers on smartphone, do you still need the tiny edge of the OLED with its share of shortcomings? I just do not appreciate Samsung way of doing things (they are in a real trouble in Korea) and Apple are much better off staying away from them.

  2. How about the Japanese, why are they not stepping in where Samsung rules now? Companies like Sony, Toshiba, Sharp, they should be sharing the Apple pie instead of giving it away like a dog bone to the 2 Korean companies/ manufacturers!!

    1. Guess here is that Samsung just has that much more manufacturing capacity than than their competitors and/or better unit pricing for Apple. Why work with a handful of Japanese suppliers when you can get a better deal for a large order from a single supplier.

  3. $376 is the estimated cost for producing an iPhone X? No wonder at $999 Apple profits remain high. At the same time any weakness in iPhone X sales reported can have a major impact in perceived future profits.

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