Apple's efforts to widen OLED screen supply for 2018 iPhones stymied by LG delays

Posted:
in iPhone edited April 2018
Apple's plans to work with LG as a second supplier for iPhone screens appear to have suffered a blow due to manufacturing delays, according to a new report.

iPhone 2019 display mix


Reports back in January indicated that Apple and LG Display were in talks for the South Korean company to supply OLED panels, for use in the so-called "iPhone X Plus" that will arrive as part of this year's iPhone line. The idea was to diversify Apple's screen supply and reduce its dependence on rival Samsung Electronics.

But according to a Wall Street Journal story published Friday, LG is "struggling" with quality panel production, putting Apple's plans in peril. Citing "people familiar with the matter," the Wall Street Journal is reporting manufacturing problems, indicating that LG may not be ready for the start of mass production of the iPhone in July. Opinions are reportedly divided within Apple as to whether LG Display will be able to make the phones in time for this year's line.

The issue, the Journal wrote, is that LG Display specializes in TV-sized OLED panels, of which it is the world's leading supplier, although the company "has yet to nail down" the production of smartphone-sized screens.

Reports in 2017 indicated that LG would not be ready to make iPhones until 2019, although in December LG was reported to have a deal to enter the supply chain.

Bargaining Power

Apple finds itself in a disadvantageous bargaining position in dealing with only one supplier for the OLED screens, which are one of the more expensive parts of the higher-end iPhones. Complicating matters is that Samsung, the supplier, is also Apple's main hardware competitor in smartphones. Meanwhile, LG Display, also based in South Korea, is itself a major rival to Samsung.

Apple is expected to make about 100 million iPhones this year, according to analyst consensus, with about half of those using OLED screens.

A history of panels

When Apple began producing what became the iPhone X throughout 2017, it soon became clear that Samsung was the only company able to mass-produce OLED panels of the size necessary for the device. Producing OLED screens is much more difficult, as a single speck of dust is capable of ruining an entire screen during the process of initial fabrication. Samsung has long used OLED screens on its own Galaxy devices.

In addition, OLED production for TV-sized panels is a mature process that's been around for years; using the technology on a smaller scale, and with optimization for a touchscreen, is much more complicated and difficult.

Apple and Samsung first reached an OLED panel deal in 2016. But by late 2017, before the iPhone X was even introduced, analyst Ming-Chi Kuo of KGI Securities was writing that Apple was in "urgent need" of a second source of OLED panels.

Apple's deal with LG, announced in December of 2017, was meant to alleviate that need, and likely give the iPhone manufacturer more leverage for cost negotiations, but whether it actually will in a timely fashion is in question.

Comments

  • Reply 1 of 11
    wood1208wood1208 Posts: 2,012member
    That is shame. Samsung's OLED is one big reason for iPhone X's higher price. If Steve Job was alive, he would have used cash on hand to expedite it's own display tech like MicroLED and work with 3rd party like TSMC to manufacture. If Apple control's tech patents than choose multiple display manufacturers to mass produce at lower price.
    edited April 2018
  • Reply 2 of 11
    Mike WuertheleMike Wuerthele Posts: 4,896administrator
    wood1208 said:
    That is shame. Samsung's OLED is one big reason for iPhone X's higher price. If Steve Job was alive, he would have used cash on hand to expedite it's own display tech like MicroLED and work with 3rd party like TSMC to manufacture. If Apple control's tech patents than choose multiple display manufacturers to mass produce at lower price.
    https://appleinsider.com/articles/18/03/19/apple-developing-microled-tech-at-secret-facility-likely-to-debut-in-apple-watch
    racerhomie3
  • Reply 3 of 11
    asdasdasdasd Posts: 5,324member
    The report on the face of it doesnt make a lot of sense. It is surely harder to make a larger screen work perfectly than a smaller one. For each batch of produced OLED sheets, any defect that would make a larger display unusable can be worked around for a number of smaller displays. If a pixel  or pixels are stuck, or not bright enough, or not functioning in the centre of a ~50 inch diameter sheet it makes that sheet unusable for a 50 inch TV but usable for smaller displays. Dozens of iPhones could be cut from it. 

    Of course the iPhone X batches may be different but thats not elaborated here. In terms of general OLED displays LG is on par, or better than, Samsung these days. 
  • Reply 4 of 11
    netmagenetmage Posts: 277member
    But on the flip side the size of the pixels on a TV screen is much larger than the pixels on a phone display so a defect that ruins a few pixels on a phone screen may not cause enough damage to even be noticeable on a TV.
    edited April 2018
  • Reply 5 of 11
    Mike WuertheleMike Wuerthele Posts: 4,896administrator
    asdasd said:
    The report on the face of it doesnt make a lot of sense. It is surely harder to make a larger screen work perfectly than a smaller one. For each batch of produced OLED sheets, any defect that would make a larger display unusable can be worked around for a number of smaller displays. If a pixel  or pixels are stuck, or not bright enough, or not functioning in the centre of a ~50 inch diameter sheet it makes that sheet unusable for a 50 inch TV but usable for smaller displays. Dozens of iPhones could be cut from it. 

    Of course the iPhone X batches may be different but thats not elaborated here. In terms of general OLED displays LG is on par, or better than, Samsung these days. 
    The pixel density of a 50-inch 4K television is 88.12 ppi. The iPhone X has a density of 458 ppi. Bit of a difference, requiring different engineering tolerances, differences in substrate processing, and higher quality requirements.
    edited April 2018 asdasdbb-15wlym
  • Reply 6 of 11
    avon b7avon b7 Posts: 4,216member
    Huawei is also apparently using LGDisplay curved OLED panels for its ultra premium phones.

    As Huawei is also seeking a second supplier, LGDisplay would appear to be getting some interest from various companies and its own LGelectronics will probably want some too.

    It's difficult to see how LG can ramp up enough production for the likes of Huawei and Apple at the same time. And Xiaomi too? That could work out to a lot of phones.

    It seems current LG OLED panels for Huawei also have Goodix in-screen fingerprint scanners built into them during the manufacturing process. I get the impression that they are testing things in the real world on a low volume phone prior to deciding what to do next.

    Last year there was talk of LG and Huawei entering a long term strategic agreement for OLED panels. No idea what came of that but if Apple also wants a commitment from LG it looks like it will be tough to deliver to everyone.

    http://www.businesskorea.co.kr/english/news/ict/19356-huawei’s-needs-lg-display-huawei-sign-long-term-smartphone-oled-supply-deal

  • Reply 7 of 11
    avon b7 said:
    Huawei is also apparently using LGDisplay curved OLED panels for its ultra premium phones.

    As Huawei is also seeking a second supplier, LGDisplay would appear to be getting some interest from various companies and its own LGelectronics will probably want some too.

    It's difficult to see how LG can ramp up enough production for the likes of Huawei and Apple at the same time. And Xiaomi too? That could work out to a lot of phones.

    It seems current LG OLED panels for Huawei also have Goodix in-screen fingerprint scanners built into them during the manufacturing process. I get the impression that they are testing things in the real world on a low volume phone prior to deciding what to do next.

    Last year there was talk of LG and Huawei entering a long term strategic agreement for OLED panels. No idea what came of that but if Apple also wants a commitment from LG it looks like it will be tough to deliver to everyone.

    http://www.businesskorea.co.kr/english/news/ict/19356-huawei’s-needs-lg-display-huawei-sign-long-term-smartphone-oled-supply-deal


    Most likely, Huawei and Xiaomi (heck LG themselves) will settle for an average quality OLED panel. Apple cannot do that, since they are getting excellent quality panel from Samsung already. If anything, Apple might be stuck with Samsung for another year, while LG/Huawei/Xioami use OLED panels from LG.
    bb-15
  • Reply 8 of 11
    avon b7avon b7 Posts: 4,216member
    avon b7 said:
    Huawei is also apparently using LGDisplay curved OLED panels for its ultra premium phones.

    As Huawei is also seeking a second supplier, LGDisplay would appear to be getting some interest from various companies and its own LGelectronics will probably want some too.

    It's difficult to see how LG can ramp up enough production for the likes of Huawei and Apple at the same time. And Xiaomi too? That could work out to a lot of phones.

    It seems current LG OLED panels for Huawei also have Goodix in-screen fingerprint scanners built into them during the manufacturing process. I get the impression that they are testing things in the real world on a low volume phone prior to deciding what to do next.

    Last year there was talk of LG and Huawei entering a long term strategic agreement for OLED panels. No idea what came of that but if Apple also wants a commitment from LG it looks like it will be tough to deliver to everyone.

    http://www.businesskorea.co.kr/english/news/ict/19356-huawei’s-needs-lg-display-huawei-sign-long-term-smartphone-oled-supply-deal


    Most likely, Huawei and Xiaomi (heck LG themselves) will settle for an average quality OLED panel. Apple cannot do that, since they are getting excellent quality panel from Samsung already. If anything, Apple might be stuck with Samsung for another year, while LG/Huawei/Xioami use OLED panels from LG.
    Yes, they definitely settle for less. General consensus is that the screens are excellent but a little off the top Samsung offerings.

    I can understand Apple wanting that extra quality for the top phones but wonder if they would eventually accept lesser, but still excellent, quality from LG for non top of the line phones if the price was right.

    On a strategic level that meeting between Huawei and LG is interesting supposing something came of it. If Huawei has signed on for a significant amount of current LG OLED panels and with any agreement supposedly being 'long term', is it unreasonable to envisage a situation where their orders take priority?

    Huawei's stated goal is to pass Apple on unit shipments relatively soon. They already did it for most of last year. Clearly, most of those phones were LCDs but if they want to shift more OLED panels this year but use a second supplier, it's clear that Apple and Huawei will be looking to LG. Huawei uses JDI too.
    muthuk_vanalingamasdasd
  • Reply 9 of 11
    wonkothesanewonkothesane Posts: 1,400member
    Approaching earnings call. The Inevitable weak sales rubbish never a fails to be accompanied by supply chain issues threatening the next launch.  
  • Reply 10 of 11
    bb-15bb-15 Posts: 269member
    avon b7 said:
    Huawei is also apparently using LGDisplay curved OLED panels for its ultra premium phones.

    As Huawei is also seeking a second supplier, LGDisplay would appear to be getting some interest from various companies and its own LGelectronics will probably want some too.

    It's difficult to see how LG can ramp up enough production for the likes of Huawei and Apple at the same time. And Xiaomi too? That could work out to a lot of phones.

    It seems current LG OLED panels for Huawei also have Goodix in-screen fingerprint scanners built into them during the manufacturing process. I get the impression that they are testing things in the real world on a low volume phone prior to deciding what to do next.

    Last year there was talk of LG and Huawei entering a long term strategic agreement for OLED panels. No idea what came of that but if Apple also wants a commitment from LG it looks like it will be tough to deliver to everyone.

    http://www.businesskorea.co.kr/english/news/ict/19356-huawei’s-needs-lg-display-huawei-sign-long-term-smartphone-oled-supply-deal


    Most likely, Huawei and Xiaomi (heck LG themselves) will settle for an average quality OLED panel. Apple cannot do that, since they are getting excellent quality panel from Samsung already. If anything, Apple might be stuck with Samsung for another year, while LG/Huawei/Xioami use OLED panels from LG.
    As seen with the Pixel 2 XL, OLED screens can have multiple problems; graininess, burn in after a few days, and uneven light levels.

    https://arstechnica.com/gadgets/2017/10/google-is-investigating-reports-of-pixel-2-xl-display-burn-in/

    If LG can’t fix these kinds of defects with their phone screens, then Apple would naturally reject the product.

  • Reply 11 of 11
    avon b7 said:
    avon b7 said:
    Huawei is also apparently using LGDisplay curved OLED panels for its ultra premium phones.

    As Huawei is also seeking a second supplier, LGDisplay would appear to be getting some interest from various companies and its own LGelectronics will probably want some too.

    It's difficult to see how LG can ramp up enough production for the likes of Huawei and Apple at the same time. And Xiaomi too? That could work out to a lot of phones.

    It seems current LG OLED panels for Huawei also have Goodix in-screen fingerprint scanners built into them during the manufacturing process. I get the impression that they are testing things in the real world on a low volume phone prior to deciding what to do next.

    Last year there was talk of LG and Huawei entering a long term strategic agreement for OLED panels. No idea what came of that but if Apple also wants a commitment from LG it looks like it will be tough to deliver to everyone.

    http://www.businesskorea.co.kr/english/news/ict/19356-huawei’s-needs-lg-display-huawei-sign-long-term-smartphone-oled-supply-deal


    Most likely, Huawei and Xiaomi (heck LG themselves) will settle for an average quality OLED panel. Apple cannot do that, since they are getting excellent quality panel from Samsung already. If anything, Apple might be stuck with Samsung for another year, while LG/Huawei/Xioami use OLED panels from LG.
    Yes, they definitely settle for less. General consensus is that the screens are excellent but a little off the top Samsung offerings.

    I can understand Apple wanting that extra quality for the top phones but wonder if they would eventually accept lesser, but still excellent, quality from LG for non top of the line phones if the price was right.

    On a strategic level that meeting between Huawei and LG is interesting supposing something came of it. If Huawei has signed on for a significant amount of current LG OLED panels and with any agreement supposedly being 'long term', is it unreasonable to envisage a situation where their orders take priority?

    Huawei's stated goal is to pass Apple on unit shipments relatively soon. They already did it for most of last year. Clearly, most of those phones were LCDs but if they want to shift more OLED panels this year but use a second supplier, it's clear that Apple and Huawei will be looking to LG. Huawei uses JDI too.
    While I agree with most of your points, I don't see Apple making a less priced OLED phone this year. Next year? Quite possible, not for sure though. So unless LG can nearly match Samsung's OLED quality, hard to see Apple using them later this year. The best bet for LG is to improve the quality of their OLED displays to the standard set by Apple, soon. 
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