Posted : 2015-11-22 17:22
Updated : 2015-11-22 18:33

Samsung challenges LG for Apple business

Apple may use OLED technology in a few years later

By Kim Yoo-chul

Samsung Display is challenging LG Display to cash in on next-generation iPhones, with the Samsung affiliate expecting Apple to move to organic light-emitting diodes (OLEDs) for its flagship iPhones.

"Samsung Display has recently renewed talks with Apple to supply its small-sized OLED displays for the next iPhones to be released in a few years, which I believe is around 2018," a high-ranking industry executive told The Korea Times last week.

The executive said such a move was aimed at diversifying Samsung Display's portfolio by cutting its heavy reliance on Samsung Electronics.

"Samsung Display-manufactured OLED displays have so far been used in all Galaxy flagship smartphones," he said. "But demand for handsets will remain weak as time goes by because the handset industry will be reshaped further."

"Samsung Display needs to have a long-term contract with new and trustworthy major customers for OLED displays," according to the executive.

He said Samsung Display was also approaching top Chinese handset vendors to cut its heavy reliance on Samsung Electronics' handset division.

"But the Chinese won't replace Apple's brand image," he said. "If Samsung starts to ship OLEDs for new Apple iPhones, then this will be huge."

Samsung Display supplies traditional LCD panels for Apple's iPads, with a small amount for current iPhones.

But according to officials, leading display materials companies such as German-based Merck, Apple is unlikely to use OLED technology for its new iPhones in the foreseeable future because today's LCDs have several advantaged over OLEDs, such as manufacturing costs.

The officials say Apple wants to keep its margins as high as possible.

But the industry executive said, "Despite the current advantages that LCD have, the display industry in which Korea has long been a leader, needs new momentum for further growth."

"Prices are being brought down and other technological issues are rapidly being addressed," he said. "If Apple adopts OLED technology in its next iPhones, this will benefit the entire ecosystem in the global display industry."

Competition with LG

The Samsung moves are expected to intensify rivalry with LG Display, which is the leading display supplier for Apple iPhones.

"LCDs are being commoditized with the rise of Chinese suppliers," said another industry executive. And it's true that LCDs have technological merits over OLEDs. "But LG Display should be adaptive and quick to persuade leading set-makers to adapt new display technology to lead Taiwanese rivals."

"From this perspective, competition with Samsung Display to provide OLEDs for Apple will get fiercer," he stressed.

He said Foxconn, also known as Hon-Hai Precision Industry, would start producing LCDs starting in 2018 to win mobile LCD orders from Apple for future iPhones. However, those iPhones would be budget models.

To counter the Samsung moves, LG Display is reviewing how to maintain its momentum as a global display leader, including a plan to build a display plant in Paju, near the North-South border.

Insiders believe the tentatively named "P10" factory may produce small and large OLEDs as well as LCDs for greater flexibility according to situations.

Therefore, LG's investment plans for next-generation displays will be subject to change according to developments and ongoing discussions, they say.

"Because LG Display and Samsung Display are keen to promote OLEDs, their investment in LCDs will be cut," said a fund manager at a U.S.-based investment firm in Seoul.

"LCDs will remain optional, not primary, and I believe groundwork has already started. Apple holds the key to the timing to open an era of OLEDs in a real sense," the manager added.

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