Thu, Feb 16, 2017 - Page 11 News List

Apple mulls Chinese firm for future iPhone screens

SEEKING ALTERNATIVES:The US firm is looking for more suppliers to cope with a global shortage of OLED displays, as industry leaders cannot meet its demands

Bloomberg

Apple Inc is in discussions with China’s BOE Technology Group Co (京東方) to supply next-generation displays for future iPhones, a key component currently provided by a Samsung Electronics Co unit, people familiar with the matter said.

Apple has been testing BOE’s active-matrix organic LED (AMOLED) screens for months, but has not decided if it will add the Chinese company to its roster of suppliers, one of the people said, asking not to be named talking about private negotiations.

BOE, one of China’s largest screen makers, is spending close to 100 billion yuan (US$14.56 billion) building two AMOLED plants in Sichuan Province in anticipation of future business.

Talks are at an early stage and it is unlikely to supply the next iPhone, but BOE is banking on outfitting the one next year or later, the person said.

If BOE is selected, it will become the first known future supplier of the next-generation screens to Apple outside of South Korea and Japan — a triumph for a Beijing-based company best known for computer and TV displays.

The US company is exploring alternatives to address a global shortage of organic LED (OLED) displays as it prepares to adopt the sharper, more power-efficient technology for its next iPhones, catching up with rivals such as Samsung and Huawei Technologies Co (華為).

The display is one of the most expensive components of a smartphone. and OLED screens are more difficult to produce, making Apple beholden to suppliers still working to manufacture the displays in mass quantities.

The world’s four biggest suppliers of smartphone displays — Samsung Display Co, Sharp Corp, LG Display Co and Japan Display Inc — reportedly have insufficient capacity to equip all new iPhones this year, a constraint that might persist into next year.

That means Apple might be forced to adopt OLED in just a single version of its device this year, the 10th anniversary of the smartphone’s debut.

“It’s an opportunity for BOE, as Apple is known to seek multiple suppliers for one component,” said James Yan, research director for Counterpoint Research in Beijing. “But it’s unlikely to challenge Samsung, because it is able to roll out high-quality screens at a steady capacity.”

BOE, which started out as Beijing Orient and enjoyed the support of a government keen to champion local technology players, is building a 46.5 billion yuan flexible AMOLED plant in Chengdu, China.

While it is ramping up capacity, it is likely to miss the next iPhone. That sixth-generation factory will not crank out a single screen until the summer, while new iPhones typically go on sale in the fall.

When that plant is up to full capacity, it will be able to put out 48,000 glass substrates per month, BOE said in an e-mailed statement, referring to the thin surfaces from which screens are carved out.

Another plant in Mianyang, China, with the same capacity and investment is expected to start production only about two years later.

The company operates only a small OLED factory in Inner Mongolia.

Eventually, when its two plants are up and running, it expects to be able to manufacture 1.6 million square meters of flexible AMOLED glass substrates per year, slightly more than researcher IHS’ estimate for total global production last year.

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