Apple looks to tap China’s BOE Technology Group for 2020 iPhone OLEDs

Apple is said to be in the final stages of certifying OLED screens from China’s BOE Technology Group for iPhones next year, as the Cupertino Colossus looks to cut component costs and reduce over-reliance on Samsung Electronics to provide OLED screens.

Cheng Ting-Fang, Lauly Li, Shunsuke Tabeta, and Kim Jaewon for Nikkei:

The iPhone maker is “aggressively testing” BOE’s flexible organic light-emitting displays (OLED), sources told Nikkei Asian Review, raising the possibility that Apple could for the first time source this advanced display technology from China. Apple will decide by the end of this year whether to take BOE on as a supplier of its single most expensive component, they said.

The entry of BOE into one of the world’s most demanding smartphone supply chains would mark a significant leap forward for the Chinese display panel industry, which has been the recipient of billions of dollars of state and public support over the past decade. The sector has been nurtured by Beijing with grants and subsidies in a bid to move its industry up the consumer electronics value chain.

The iPhone maker currently buys OLEDs from South Korea’s Samsung, which dominates the premium screen market globally with more than 90% share, and LG Display… Apple is expected to produce at least two iPhones with OLED displays in 2020, sources said. The California tech titan is also considering OLED screens for all the new models due to be unveiled September next year, three sources said. Two sources with knowledge of the situation said BOE was likely to supply the new iPhones next year if it wins certification. But it might first be asked to offer displays for repair purposes, as well as panels for older models of iPhones, one source suggested.

BOE has since 2017 supplied LCD panels to Apple for its MacBook and iPad, increasing pressure on established players such as Samsung Display, LG Display, JDI, Sharp and Taiwan’s AU Optoelectronics.

MacDailyNews Take: Adding BOE, which also makes LCDs for Apple’s MacBook and iPad families, will provide some competition for Samsung Display which currently has over 90% share of the OLED market, and allow Apple to drive down costs for the iPhone’s most expensive component. Sources told Nikkei that BOE-made OLED displays could potentially undercut Samsung Display by some 20% which will ratchet up competitive pressure among Apple suppliers which is always a good thing for Apple their customers, not to mention shareholders.

However, beyond the question of Apple’s thumbs up, there’s another wild card, the quartet reports: “BOE is still vulnerable to a potential crackdown from the U.S., where companies such as Corning, 3M, and Applied Materials provide the most crucial materials and equipment to make those screens. Any attempt by the U.S. to clamp down on supplies to BOE — as Washington did to Huawei Technologies — could hit the Chinese display champion badly.”