KGI Securities analyst Ming-Chi Kuo in his latest note says that Samsung will soon be joined by LG Display in supplying OLED panels to iPhone. He claims that Apple is “committed” to having LG as one of its OLED supplier by 2018 and is strongly pushing the company for it.
Right now, the OLED panel market is dominated by Samsung, both in terms of production and technology. The Korean company already has about 95 percent of the smartphone OLED panel market share while other display makers like LG Display and JDI are still struggling to set up their OLED factories.
Due to Samsung’s dominance in this field, Apple has lost its bargaining power. Additionally, it also has to solely rely on one supplier for a key iPhone component which it strongly averses.
Kuo says that LG Display can work with other companies in the market to improve its OLED production rate.
Samsung is now Apple’s sole iPhone OLED panel supplier across front- and back-end manufacturing. We think LGD could institute a similar production model. However, considering its strengths are in front-end process, collaborating with a specialized back- end process provider like GIS will, in our view, significantly boost iPhone OLED panel output rate.
The analyst speculates that LG Display can team up with GIS for improved lamination which will also help it gain advantages of vertical integration with Hon Hai (Foxconn) — Apple’s biggest supplier.
Multiple reports in recent times have claimed that Apple is looking to invest up to $2.7 billion in LG Display to help it set up its OLED production factories. However, even if LG Display starts supplying panels to Apple in 2018, its contribution will likely be minimal. It’s only in 2019 and 2020 that the company would be able to supply a substantial amount of OLED panels to Apple for the iPhones
With Apple looking to switch to OLED panels for its entire iPhone lineup in 2018, the company is scouting for additional OLED suppliers as it does not want to rely solely on Samsung for another year.