To avoid component shortage for key Face ID modules, Apple is planning to invest heavily in LG Innotek to secure supply of 3D sensing modules for its 2018 lineup of iPhone and iPad.
Apple will reportedly be making an upfront payment of $820 million to LG Innotek which would allow the latter to expand its production facility of 3D sensors and camera modules. Apple’s decision apparently came after Apple’s CEO Tim Cook and LG Innotek CEO Park Jong-seok met in November last year. This was a rare meeting as Tim Cook does not participate in negotiation meetings with suppliers.
Apple is making the upfront payment to LG Innotek so as to fund the expansion of its production facilities. This way, the Cupertino company is hoping to avoid any 3D sensing component shortage which it faced with the launch of the iPhone X this year. The initial supply of the iPhone X was heavily limited as Apple’s suppliers were struggling to produce key Face ID components. However, they managed to solve all yield issues sooner than expected which lead to the handset’s supply improving well before the crucial holiday season in the United States.
Apple is rumored to launch three new iPhone models this year, with all three of them featuring Face ID. Additionally, the refreshed 2018 iPad Pro is also expected to feature Face ID. This would mean that Apple would need more 3D sensing components this year than it did in 2017. Thus, by investing in LG Innotek, Apple is basically ensuring that it manages to secure a steady supply of the components.