Most Suppliers Aren’t Ready Yet Even as Apple Wants OLED in IPhones

Seeking to entice consumers with new technology that’s already been embraced by other high-end smartphone makers, Apple Inc. has big plans to outfit its next iPhone with vibrant, energy-sipping organic LED displays.

But with constraints continuing into 2018, people familiar with the matter said, presenting a potential challenge for the Cupertino, California-based company, the trouble is that the four main suppliers for such components won’t have enough production capacity to make screens for all new iPhones next year.

Sources said that suppliers are still working to manufacture the displays in mass quantities as OLED screens are more difficult to produce and have put Apple at the mercy of suppliers. Samsung Display Co., LG Display Co., Sharp Corp., and Japan Display Inc. are the four largest producers. Samsung may not be able to make enough due to low yield rates combined with increasing iPhone demand even as the South Korean company is on track to be the sole supplier for the new displays next year.

Pushing back adoption of the technology or cause other snags, the supply constraints may force Apple to use OLED in just one version of the next-generation iPhone.

“Apple has already figured in there will be high demand for the OLED model and they’ve also figured out there will be constraints to these panels,” said Dan Panzica, a supply chain analyst at IHS Markit. He said that supply constraints are likely due to the combination of the difficulty of producing OLED panels and Apple’s stringent quality requirements.

People with knowledge of the matter said that in the 10th anniversary of the smartphone’s debut, Apple plans to ship at least one new iPhone with an OLED screen next year.

According to KGI Securities analyst Ming-Chi Kuo, partly because there won’t be enough OLED displays to satisfy anticipated demand, a pair of other new iPhone models will likely feature screens that use older LCD technology.

“Display technology is still a pretty key driver of the purchasing experience,” said Ben Bajarin, an analyst at Creative Strategies. New display features as iPhone selling points has been made previously by Apple. For example, the iPhone 6 in 2014 brought new 4.7-inch and 5.5-inch screen options, the iPhone 5 in 2012 introduced the iPhone’s first display size increase and the iPhone 4 in 2010 added Apple’s first Retina Display.

According to a person familiar with Apple’s plans, quoted in the media, the OLED iPhone, at least, will have a new look that extends glass from the display to the device’s back and edges. The sources said that rather than a physical button that can be pressed, this all-glass design will have a virtual Home button embedded in an edge-to-edge screen.

An Apple spokeswoman declined to comment.

As it did for 3D Touch and Apple Pay, every September, Apple typically introduces new technologies for its iPhones across all models when they’re unveiled. An unusual step would be user-facing technology in the same iPhone generation using different core. All current iPhone 7 models have LCD screens. Still, Apple may have no choice.

Sharp and Japan Display have said that they are on track for production in 2018, while seeking to manage expectations and are still working on test procedures for OLED screens.

“There is all this talk about OLEDs, but I’m not at all sure about their future,” Sharp President Tai Jeng Wu told reporters recently. “We need to work on developing the technology, but whether we can succeed remains to be seen.”

(Adapted from Bloomberg)

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