If there were still doubts that Apple would be embracing OLED over LCD moving forward, this new bit of information might dispel that. According to Korean media, Apple and LG Display, LG’s panel-making business, have just reached an agreement into how much OLED displays the latter will supply Apple, most likely for iPhones, next year. This spells some trouble for Samsung, as it now has to compete more fiercely with its rival for a larger share of a contract that will, eventually, benefit its other big rival.
This almost convoluted state of affairs is actually not that uncommon in this market. While Apple and Samsung are almost always at each other’s throats, they also try to maintain manufacturing relationships behind the scenes. Samsung, at one point, fabricated Apple’s A processors after losing that spot to TSMC. And while it might not completely lose its OLED contract with Apple, it can no longer claim preferential treatment.
That treatment is exactly the situation that Apple wants to avoid. By adopting OLED displays, Apple has practically limited itself to one supplier: Samsung. Without other choices, Apple has less bargaining power and can be subjected to Samsung’s demands. But now it has a second supplier for OLED panels. It’s also not unusual for smartphone makers, including Apple, to source components from different manufacturers, all of whom have to fight over getting a bigger contract than their competitors.
It hasn’t exactly been smooth sailing for LG Display either. A lot of its future OLED production hinges on whether Apple and LG Display can agree on an upfront amount of panels to be produced. Since there are very few OLED makers capable of mass production, there is a higher risk of loss when there’s a mismatch between supply and actual panels purchased. If, at any time, Apple changes its mind about how many OLED displays it needs, LG will naturally be on the losing end.
That is why LG supposedly agreed to only produce a 45,000 OLED panels per month, to minimize any hits it might take. That alone would be enough to make about 53 million 6-inch iPhones in a year. But since production isn’t always perfect, that could just translate to 32 million OLED iPhones a year with a yield of 60%.