Panel suppliers struggling to meet Apple’s large order volume for OLED iPhones

iPhone 7 display

For all the talk of Apple’s rumored switch to the superior, power-sipping organic light-emitting diode (OLED) display technology for next year’s iPhones, it’s increasingly looking like OLED screens will be limited to a single model.

That’s because panel manufacturers are currently struggling to meet Apple’s expectedly large order volume and stringent quality requirements. That OLED screens are far more difficult to produce than LCDs isn’t helping either.

Bloomberg’s Mark Gurman and Jungah Lee said today that four main OLED panel suppliers—Samsung Display, LG Display, Sharp and Japan Display—are currently suffering from yield issues, with constraints potentially continuing into 2018.

One person familiar with the matter told Bloomberg that although Samsung is “on track” to be the sole supplier for the new displays next year, it may be unable to make enough OLEDs due to low yield rates combined with increasing iPhone demand. Apple and Samsung reportedly have an exclusive OLED supply deal for 2017 even if the Korean company cannot build enough OLEDs for its own Galaxy phones.

From the report:

Apple’s initial OLED order from Samsung is for 100 million units over one year, according to people familiar with the agreement. Even so, Samsung will probably only be able to deliver a portion of that for the 2017 holiday period.

Apple shipped about 75 million iPhones in the 2015 holiday quarter. Analysts predict iPhone shipments could hit 90 million units in the 2017 holiday quarter.

As for other suppliers, Japan Display saw urgency in boosting its OLED capacity so that “we are not caught empty-handed if the technology does end up capturing a majority” while Sharp expressed pessimism as to whether it can succeed in OLEDs.

LG Display was late in OLED investment for mobile devices and is now playing a catch up.

“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. Because suppliers may not have sufficient OLED production capacity, only the highest-end 2017 iPhone model may have an OLED-based display.

This bit is also interesting:

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

KGI Securities analyst Ming-Chi Kuo has been saying that the iPhone 7 and iPhone 7 Plus will be refreshed next year with updated hardware and adopt a glass enclosure instead of metal, but retain TFT-LCD panels, with a third iPhone model with an OLED-based screen likely to be added to the family.

In his latest report issued to clients this morning, Kuo said the OLED iPhone will have a 5.8-inch wraparound OLED panel with an “active screen area” measuring between 5.1 and 5.2 inches diagonally.

Apple currently utilizes OLED panels for the Apple Watch’s display and the new MacBook Pro’s Touch Bar. OLED technology doesn’t require a backlighting, helping it consume a fraction of the power of the classic TFT-LCD panels found on all iPhones to date.

In addition to energy savings, OLED panels render deeper blacks, provide more vibrant colors and better contrast and make possible ultra high resolutions than their LCD-based counterparts.

Source: Bloomberg