Apple may be stuck with Samsung displays as LG can't keep pace
23 April 2018
Apple Inc's efforts to line up LG as a second supplier for its high-end smartphone screens and reduce its dependence on Samsung Electronics Co have hit a hurdle, according to a Wall Street Journal report citing people familiar with the matter.
South Korea's LG Display Co hopes to provide organic light-emitting diode displays for iPhones slated for release this fall, the people said. However, manufacturing problems have caused LG to fall behind the schedule that many suppliers follow to begin mass production for new iPhone models, which usually starts around July.
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.
According to 9to5Mac, one of the reasons for the $999+ price-tag of the iPhone X is the cost of the Samsung-made OLED screen. The latest estimate is that Samsung charges Apple around $97 per display.
Apple's negotiating position has been weak, as Samsung has so far been the only company able to make the displays to the iPhone maker's exacting standards in sufficient volumes. That looked set to change as Apple worked to bring LG on board as a second supplier for this year's iPhones, but that plan now seems to be in doubt.
LG is a leading manufacturer of the large OLED panels used in TVs, but is struggling to master the different approaches needed for phone-sized panels, say WSJ's sources.
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 report said.
One report earlier this year said that the plan was for Samsung to make the displays for the 5.8-inch model while LG would make them for the larger 6.5-inch Plus model expected to debut this year.
Apple doesn't have too long to make a decision as mass production of this year's iPhones is expected to start around July, and Samsung will need sufficient notice to ramp up its own production schedules if it is to continue being the sole supplier.
There have been varying estimates of the manufacturing cost of the iPhone X, some suggesting that Apple makes a lower margin on its flagship model, others arguing the opposite. One recent report claimed that the iPhone X successor would be around 10 per cent cheaper to make, a figure likely based in part on expectations of lower display costs through making Samsung and LG compete for orders.
The consensus view is that Apple will launch three new models this year: A successor to the 5.8-inch iPhone X; A 6.5-inch iPhone X Plus; and A cheaper 6.1-inch model with a similar design but LCD screen.
A KGI report this week indicated that the latter model could be priced as low as $550. It is also rumoured to have a dual-SIM configuration, a popular feature in a number of overseas markets.