Apple starting to roundup suppliers for OLED
While Apple (AAPL) has little choice but to choose Samsung Display (pvt) as the supplier for a potential OLED iPhone given SDs capacity and expertise in small panel OLED production, the supply chain for such a product remains an open field, with many vying for the opportunity to gain entrance to that select list. Companies are already announcing expansion plans in order to garner Apple’s attention, as the supplier list is expected to be completed by year-end with component delivery starting in May 2017. Indications are that Samsung display modules will be assembled in Vietnam, and a number of South Korean companies have slated enlargement of their facilities in that region to build out such an ecosystem.
The Korean press has focused on local supplier Interflex (051370.KS) as a strong contender to become a supplier of flexible PCBs[1] with the company issuing ~$60m of new stock to finance its facility expansion in Viet Nam, rather than in South Korea, and we note that Samsung Display, while it produces raw displays in South Korea, assembles display modules in Bac Ninh Province, Vietnam. Apple is also expected to choose OLED material suppliers by the end of September, with competitions between suppliers already underway, with Samsung SDI (006400.KS), Duksan Neolux (077360.KS), Idemitsu Kosan (5019.JP), SFC (112240.KS) and Dow (DOW) whispered to be in contention. We note that Apple has no say in the choice of phosphorescent OLED emitter materials, as Samsung Display’s license and material supply contract with Universal Display (OLED) precludes them from using any other phosphorescent organometallic OLED emitter supplier, but while Samsung Display engineers will likely have a very significant say in the other OLED stack materials, Apple’s potential buying power will certainly be part of the negotiations.
While the idea that Apple will use OLED displays, other than in the Apple Watch, in 2017 are valid, the product type and physicality of the device are what is really in contention. From a physical standpoint, a standard fixed OLED smartphone would be a substantial, but manageable task for production at Samsung Display given their current capacity and expansion plans, even for a high volume product like the iPhone. That said, should Apple decide to step up to a conformed or “flexible” OLED display, there are considerable issues that would have to be resolved, particularly relating to capacity availability. Recent statements by South Korean research firm UBI indicating that they believe Apple will be producing more flexible devices than Samsung by 2020, which we find a stretch, lead us to run a few scenarios as to how the realities of Apple’s potential large-scale entry into the OLED world might look, which we will discuss at a later date, but if Apple is serious about a move toward scaling their OLED product production, they will be making such product and supply chain decisions soon, which have already had an effect on the OLED supply chain.
[1] PCB – Printed Circuit Board
While Apple (AAPL) has little choice but to choose Samsung Display (pvt) as the supplier for a potential OLED iPhone given SDs capacity and expertise in small panel OLED production, the supply chain for such a product remains an open field, with many vying for the opportunity to gain entrance to that select list. Companies are already announcing expansion plans in order to garner Apple’s attention, as the supplier list is expected to be completed by year-end with component delivery starting in May 2017. Indications are that Samsung display modules will be assembled in Vietnam, and a number of South Korean companies have slated enlargement of their facilities in that region to build out such an ecosystem.
The Korean press has focused on local supplier Interflex (051370.KS) as a strong contender to become a supplier of flexible PCBs[1] with the company issuing ~$60m of new stock to finance its facility expansion in Viet Nam, rather than in South Korea, and we note that Samsung Display, while it produces raw displays in South Korea, assembles display modules in Bac Ninh Province, Vietnam. Apple is also expected to choose OLED material suppliers by the end of September, with competitions between suppliers already underway, with Samsung SDI (006400.KS), Duksan Neolux (077360.KS), Idemitsu Kosan (5019.JP), SFC (112240.KS) and Dow (DOW) whispered to be in contention. We note that Apple has no say in the choice of phosphorescent OLED emitter materials, as Samsung Display’s license and material supply contract with Universal Display (OLED) precludes them from using any other phosphorescent organometallic OLED emitter supplier, but while Samsung Display engineers will likely have a very significant say in the other OLED stack materials, Apple’s potential buying power will certainly be part of the negotiations.
While the idea that Apple will use OLED displays, other than in the Apple Watch, in 2017 are valid, the product type and physicality of the device are what is really in contention. From a physical standpoint, a standard fixed OLED smartphone would be a substantial, but manageable task for production at Samsung Display given their current capacity and expansion plans, even for a high volume product like the iPhone. That said, should Apple decide to step up to a conformed or “flexible” OLED display, there are considerable issues that would have to be resolved, particularly relating to capacity availability. Recent statements by South Korean research firm UBI indicating that they believe Apple will be producing more flexible devices than Samsung by 2020, which we find a stretch, lead us to run a few scenarios as to how the realities of Apple’s potential large-scale entry into the OLED world might look, which we will discuss at a later date, but if Apple is serious about a move toward scaling their OLED product production, they will be making such product and supply chain decisions soon, which have already had an effect on the OLED supply chain.
[1] PCB – Printed Circuit Board
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