​On October 29, BOE (200725.CH), China’s largest panel producer, held a quiet ceremony marking the final certification needed to become a full scale OLED supplier to Apple for the iPhone 13 line.  As we have noted on numerous occasions, this has not been an easy path for BOE, as the company was unable to qualify for full production at least twice that we know of, and was most recently put on a limited production schedule until final certification could be affirmed.  While BOE has been producing small panel OLED for Apple, an estimated 5.5m units in 1H, the final certification proves out the company’s ability to reach both quality and production goals set by Apple, with an additional 6.5m units produced between July and the end of October, and a current run rate of between 1.5m and 1.9m units/month.  According to Chinese press, by the end of the year this run rate would represent ~10% of Apple’s iPhone shipment target of 160m units, with BOE showing a total of ~50m OLED units (all customers) this year.
In 2022 BOE should be increasing capacity at its Gen 6 Chongqing OLED fab as phase 2 capacity begins production.  While the local press says that production will start in January, and BOE will increase shipments to 80m units next year, we expect mass production, based on a more conservative ramp to see an incremental 27m units from Chongqing in 2022, but we note that is at 100% yield, which we expect is far different than what is seen currently and what will be the case as the new Chongqing lines ramp up.  While we expect BOE will certainly be a bigger contributor to Apple’s OLED supply chain in 2022, we hesitate to make predictions as to absolute share as much will depend on BOE’s ability to ramp production to a viable yield, and BOE’s ability to produce the particular OLED display variations that Apple will request in 2022. 
As we expect most, if not all of the LTPO OLED displays for the top iPhone models will be produced by Samsung Display (pvt), and LG Display (LPL) will produce much of the intermediate model, BOE’s share will be limited somewhat, depending on Apple’s application of LTPO across the iPhone line.  This is certainly a big win for BOE, after a long and difficult path to success, but we expect the Chinese press will take the win to mean that BOE’s ‘glorious success’ will ‘mark the end of South Korean OLED domination’, a bit of a stretch in 2022.  It does mean more competition for both SDC and LGD, but we assume they have been expecting that for some time

​As we have noted in a number of recent notes the display industry, particularly the LCD segment, has been leveraging itself toward the production of IT products (notebooks, monitors, and tablets) and away from LCD TV panel production.  Samsung Display (pvt) has sold or shuttered much of its TV panel business, keeping its only large panel production lines open at the request of parent Samsung Electronics (005930.KS), a much more long-term decision made back in 2019, while Chinese brands continue to build out large panel capacity, with a near-term push toward using that and existing capacity to produce more IT panels.  On a m2 basis, smaller panels get a higher ASP so some of the decision to allocate production resources comes from such motivation, but more from relatively mundane global TV demand growth, especially as compared to the increased demand for IT products stimulated by COVID-19.
The recent price decreases seen for TV panels has begun to justify Samsung Display’s original large panel capacity reduction thesis and also helps to justify other panel producers’ decisions to increase capacity exposure to IT products, but along with that decision comes the higher risk toward IT panel pricing.  Until recently that has not been an issue as IT panel prices continued to rise as TV panel prices declined, with continuing demand from brans, but two factors seem to be changing, both of which increase that risk further.  Display driver shortages have been pushing brands to build IT panel inventory.  Fear of a lack of product during the holiday season put brands in the position of paying up to get display module units, with targets based on the strong demand seen over the last year, but over the last two months demand seems to have weakened, first showing up as a slowdown in Chromebook shipments, and then as a broader slowdown in notebook demand. 
There are some technical reasons for this slowdown as students begin to return to classrooms and remote schooling programs wind down, and display drivers have become more available, yet notebook panel shipments have continued to be strong, at least through 3Q.  We expect that some of that 3Q IT order strength came from panel producers filling customer orders that had been delayed due to component shortages or had been under allocation, but hints from panel producers on 3Q calls that indicated a shift toward customers that supply IT products to corporate customers and away from those supplying retail, lead us to see a bit more concern about IT order patterns and there sustainability.
Typically (5 year average) the 4th quarter sees notebook panel shipments decline ~0.3% q/q but we have seen expectations for 4Q notebook panel shipments as low as -1.5%, and while we expect that might represent the extreme, anything significantly above the average would be troubling and would indicate potential notebook panel price weakness.  At just under 34% of large panel quarterly unit volume, weaker notebook panel prices could jeopardize 4Q panel producer sales, especially if TV panel prices continue to decline.  Notebook panel production plans are expected to be up between 15% and 19% in 2022, while recent expectations for notebook demand next year is for less than 1% unit volume growth.  Panel producers always have the option of shifting production to monitors or back to TV panels if prices dictate, but it is beginning to look like a game of musical chairs.

Samsung Display’s (pvt) QD/OLED project is a game changer for SDC, who has moved away from generic LCD TV production over the last three years.  The project, which has developed a process for producing a blue OLED emitting platform that gets partially converted to red and green using quantum dots, creating an RGB pixel, is a process that would require new production facilities that are specific to the technology.  As this process does not require a color filter, it has the technical ability to be brighter and less expensive when compared to the WOLED process currently used by LG Display (LPL) to produce OLED TV panels.  While the structure for QD/OLED is different from typical RGB OLED displays, the basic OLED stack still has the same materials that surround the emitter that help to generate light, such as HTL (Hole transport layer), ETL (Electron Transport Layer), HIL (Hole Injection Layer), and EIL (Electron Injection Layer), along with blocking layers and an anode and cathode.  One new material that has been said to be included in the QD/OLED stack is called ‘filler’ and while it seems more like it might be akin to cereal by-products that have little nutritional value but add bulk, it serves a purpose that adds to the structure’s ability to produce light.

Such a structure, as seen in Fig. 2, uses a high refractive material as the filler and an encapsulation material, however much of the light is reflected internally, so the OLED stacks (#42 in Fig. 2) are surrounded by a bank of material that sends the internally reflected light out of the display rather than being trapped internally.   While the concept of structures that extract light from displays is certainly not new, it seems this concept is being built into SDC’s QD/OLED process directly, making the ‘filler’ part of the display structure for the first time.  We believe Solus Advanced Materials (336370.KS) (formerly Doosan Solus) is the supplier of the filler material, creating a new category of materials to the QD/OLED stack, and while the use of fillers will depend on how easily the structures can be built and how effective they are in capturing light, we expect Solas to join other QD/OLED material suppliers such as SFC (JV between SDC and Hodogaya Chemical (4112.JP), Duksan Neolux (077360.KS), and Merck (MRK).
​

Note:  We are only looking at Samsung’s display, TV, and mobile businesses in this note.
Samsung Electronics (005930.KS) reported 3Q sales of 73.98t won ($63.24b US), up 17.4% q/q and up 10.5% y/y and operating profit of 15.82t won ($13.52b US), up 25.9% q/q and up 28.1% y/y.  The company generated gross margins of 42.0%, the best since 3Q ’18 and operating margins of 21.4%, also the best since 3Q ’18.  On a comparative basis 3Q is typically up 8.9% (5 year avg.) q/q and up 6.1% y/y.

Samsung’s display business, which represented 12.0% of sales, was up 29.0% q/q and up 21.0% y/y, and saw a decline in operating margins from 18.6% in 2Q to 16.8%, as costs increased. TV panel prices declined in the quarter, continuing to generate losses in Samsung Display’s (pvt) large panel display business, but small panel sales were strong as Apple (AAPL) and other customers built inventory toward recent model releases.  Samsung did mention strength in foldables but gave little detail on their contribution to total display results.  Samsung guided for continued growth in the display business in 4Q, again led by small panel OLED displays offsetting losses in the large panel TV business.  There was mention that OLED devices, other than smartphones, would begin to play a bigger part in total OLED sales, although are expectations for real growth in that space are oriented toward 2022 and there was also mention of Samsung’s program to begin production of its new QD/OLED TV product as an offset to its (intentionally) declining TV display business.  There was also mention of component costs and shortages, neither of which are specific to Samsung, as points of concern for both 4Q and 2022. 
On an overall basis Samsung’s display business, which is greatly tilted toward small panel OLED, is better positioned than most, although that was not the case for much of last year and earlier this year.  Samsung Display had been the most aggressive of display producers in reducing its exposure to the large panel TV production space in 2019 and closed or sold much of its large panel production capacity.  As large panel prices rose during 2020, SDC held off closing remaining large panel LCD production at the request of Samsung Electronics, its large customer in that market, but SDC’s overall outlook on generic large panel LCD production has likely changed little, especially with the large panel price reductions seen recently.  SDC hopes to replace the generic large panel LCD business with its soon-to-be-released/announced quantum dot/OLED displays, which will become an integral part of the company’s large panel display business if successful. 
As we have noted in the past, there is significant risk associated with developing a new commercial technology in the display space, but if the product passes muster, it will leverage Samsung’s TV business into a ‘premium’ panel category, something Samsung Display has been missing and will give SDC a display product with which it can use to compete against LG Display’s (LPL) OLED TV panel business.  That said, such a product would generate losses for some time, so we expect no profit contribution from that business until 2024.  While we expect SDC to be successful with QD/OLED, we put more emphasis on SDC’s push to expand its OLED display business into the notebook and monitor space, which began in earnest this year, and see continued expansion in that business as SDC improves its OLED notebook cost structure over the next year.  While OLED notebooks will remain in the ‘premium’ notebook category in 2022, we expect their use in mid-tier notebooks to expand in 2H 2022.

​Samsung’s consumer electronics division (~56% is TV), which is ~19.1% of sales, grew sales 5.2% q/q and 0.1% y/y but operating margins for the division as a whole declined from 7.9% in 2Q to 5.4% in 3Q.  While the TV division margins are not broken out, costs associated with the TV business (components, panel prices, logistics, etc.) were responsible for much of the margin reduction.  However the TV segment itself (10.6% of total company sales) grew 9.1% q/q but declined 5.1% y/y against a strong 3Q last year.  Typical 3Q q/q growth (including last year’s +55.2%) is 13.1%, although excluding 2020 would be a more normal 2.6% q/q increase, so it was still a strong quarter in terms of q/q sales averages with Samsung’s QD TV (not QD/OLED) and other premium products leading the way.
4Q guidance for the TV segment is for growth q/q but down again on a y/y basis as lessening COVID-19 restrictions move consumers away from a sequestered lifestyle.  Guidance for 2022 in the TV segment was less optimistic, with more emphasis on logistical issues slowing TV market growth.  While logistics are certainly an issue, we question whether that is the source of reduced demand, but we do agree with the lower demand outlook for TV sets.  That said, if TV panel prices continue to decline in 2022, while it will hurt LCD panel producers, it would be beneficial for Samsung’s TV business, giving them room for the discounting needed to compete against Chinese competitors. 
Samsung, as are almost all other TV set brands, is hoping that ‘premium’ TV products will offset lower overall set demand, and while the premium market will certainly be the growth driver for the TV set business in 2022, we expect Samsung’s broad range of premium TV products will take considerable shelf space in 2022.  With quantum dot enhanced LCD TV, Mini-LED TV, Ultra-large TVs, and potentially QD/OLED TV offerings, Samsung will certainly give consumers ample choices in the premium category, but competition from Chinese brands such as TCL (000100.CH) and Hisense (600060.CH) in key markets will still be an issue in 2022. 
Samsung will have less of a cost burden to carry than those Chinese brands that have their own TV panel production as large panel prices decline, and will be able to cherry pick the market for the best supply deal, which was the intent back in 2019, but the margin leverage usually gained by TV set manufacturers when panel prices decline could be offset by continued component shortages and logistics costs.  If we had to be somewhere in the TV space in a year when demand is reduced, it would be with either Samsung (more premium product and little large panel LCD production drag) or LG Electronics (066570.KS), given the growth of their OLED TV business in 2022, although LG Display (LPL) still has enough large panel LCD production to see some negative influence from that part of their business next year.  

Samsung IT/Mobile division (38.4% of sales) saw sales up 27.6% q/q, against a weak 2Q, but down 6.8% y/y against last year’s strong 3Q.  The mobile segment itself (37.0% of total sales) grew sales 27.6% q/q but declined 8.3% y/y.  IT/Mobile operating margins declined from 14.3% last quarter to 11.8% in 3Q.  Overall, Samsung’s smartphone shipments grew in the quarter with the introduction of new foldable smartphones and an expanded mid-tier lineup, but increased marketing costs (foldables) squeezed margins a bit.  Guidance for 4Q is for increased smartphone demand with a caveat toward component issues.  2022 guidance was still optimistic, with a focus on growing the foldables line, making it a significant part of its ‘flagship’ Galaxy offerings, which have been weak over the last two product cycles.  Samsung has begun to offer a ‘bespoke’ service for its foldables, customizing devices to customer specifications, which the company hopes will increase consume focus on foldable overall, but the service is too new to gain any insight in whether it will serve to generate additional sales without lower margins.

​Across the board, the segments we look at, Samsung did as well or better than most, and given their size, volumes, and internal capacity, they were able to sidestep at least some of the component and logistical issues facing most in the CE space.  The company still seems optimistic about 4Q but a bit less so for 2022, although we expect they are better positioned overall if 2022 looks more like pre-COVID years.  That said, Samsung’s success in 2022, in the markets we cover, will depend on their ability to differentiate their CE products.  Without that differentiation they will face the same diminishing returns that a slower CE growth environment places on participants.  They have a better shot than most but we expect 2022 will be a more difficult year.  

​In a not-so-surprising move, Samsung Display (pvt) has begun the process of building out additional small panel OLED capacity with a new line that will become part of the A3 and A4 lines that are the mainstay of the company’s OLED mobile display production lines.  The new Gen 6 lines are expected to be built in the former L7-2 fab, a former LCD production line in Asan that SDC closed last year.  These new lines, which will be built out in two phases, will add to capacity provided by A4 and A4-1, with A4-1 being another line that was built in the shell of the former L7-1 LCD line.  The reason for the new fab is to supplement the production of small panel LTPS OLED displays (and some LTPO), which SDC had been producing on the A3 and A4 lines, however when those lines were updated to LTPO backplanes, those used by Apple, the production capacity was reduced.  When the new lines are completed, SDC’s combined A3 and A4 capacity is expected to be 165,000 sheets/month. 
The first line (15K) is expect to see equipment move in next year, which puts our production start in 3Q ‘2022.  The 2nd phase is estimated to start ~ one year later.  SDC is expected to spend ~$850m on equipment for the first line, which will also use some of the tools removed from the upgraded A4 lines, but as LTPO tools are more expensive than those for LTPS, the cost of the fab will likely be higher than a typical LTPS Gen 6 line.  SDC is pushing to capture as much of Apple’s iPhone business as possible, despite competition from LG Display (LPL) and BOE (200725.CH), and with the expectation that Apple will increase the number of iPhone models using LTPO next year, SDC must be able to guarantee Apple that it has the capacity to be the dominant supplier of LTPO OLED displays going forward.

​The Chinese trade press has been extolling the virtues of BOE’s (200725.CH) tacit acceptance into the Apple supply chain and the company’s dominance of the LCD panel space, as it has in the past, and while BOE does get closer to becoming a major supplier to Apple, the gist of some of the ‘glorious’ press is that BOE has also broken into the Samsung Electronics supply chain and is poised to ‘dominate the industry’ as it seeks to replace South Korean (and other) OLED panel producers that have been suppliers to Samsung in the past, particularly affiliate Samsung Display (pvt).
Various statements as to BOE supplying displays for the Samsung Galaxy M series, a low-end smartphone sold in the Mid-east and Asia carries some truth as far as our checks go, but as to whether they are the exclusive supplier (not likely), eliminating  Samsung Display as a supplier from this line, we cannot confirm.  Stories about BOE becoming a potential supplier to Samsung’s “A series” line, among the most popular of Samsung’s phones in terms of units, are also unconfirmed, but we expect much of the talk about BOE’s potential for supplanting Samsung’s typical OLED display suppliers, Samsung Display and LG Display (LPL), is likely coming from the potential approval of BOE into Apple’s iPhone supplier list, which is expected to receive final approval next month.
BOE has been supplying some displays to the iPhone supply chain, but has yet to become a primary supplier, although we do expect that to happen in 2022.  That said, the question remains as to what percentage of the display demand from the iPhone 13 and future series BOE will garner, something we have spoken about a number of times in the past.  Apple not only has display specs that are demanding, both from a technical standpoint and a capacity standpoint, but is very wary of jumping into new technology unless they are fully satisfied that suppliers can meet consistent quality standards.  This tends to categorize suppliers, even existing ones, as to what model’s displays they will produce, sometimes limiting a model to only one supplier if the capacity or quality is still a question.  BOE will have to prove to Apple that it can meet the same specs and volumes that both Samsung Display and LG Display produce in order to become a volume supplier in the same vein as the others, a task that will likely take a number of years.
As to BOE supplying OLED displays to Samsung Electronics, we see that as a somewhat different animal, given that Samsung Electronics has a vested interest in Samsung Display.  That does not mean, at least over the last few years, that Samsung would not use other display producers, and certainly has in the LCD space where a number of LCD suppliers, including BOE, have replaced Samsung Display in the large panel space, where SDC has reduced its production to almost nil.  Where the questions arise however is in the OLED space, where SDC is the leading supplier of flexible and rigid OLED displays for smartphones, and Samsung is their primary customer. 
Samsung Electronics does have to compete with other smartphone brands, especially Chinese brands, well known for producing smartphones that rival feature sets on flagship phones from Samsung.  This competition continues to push Samsung Electronics to find ways to cut costs, especially on low and mid-priced phones, where they face the most competition from Chinese brands.  Given that the display is the most costly single component of most smartphones, logic holds that reducing the cost of OLED displays is the focus of Samsung’s attention and while they are the parent of SDC, SDC is not usually the lowest cost producer.
This is both a function of production costs in Korea vs. those in China, and the fact that most Chinese panel producers are supported financially by the Chinese government through capital project and operating subsidies.  SDC also has the burden of maintaining profitability, especially in the OLED space given it waning LCD capacity, which is not the case for Chinese OLED producers, who have yet to turn profitable in the OLED display space on a yearly basis.  This leaves parent Samsung Electronics to push SDC for lower OLED panel prices, and what better incentive than to give some of its business to Chinese competitors, to make sure SDC understands that it must remain competitive with other OLED panel suppliers.
 We don’t doubt that Samsung Electronics will continue to use Chinese OLED display producers as leverage, encouraging them to continue to develop new products, and would increase usage of same if SDC does not respond in terms of price.  But in the long run, if Samsung Electronics is still going to maintain a smartphone business that is based on premium products, be they the traditional Galaxy S line or new foldables, they will be using SDC in as many instances as possible, and while Chinese OLED producers will make inroads, they will have a far more difficult time replacing SDC with Samsung than they might with Apple, where the brand has no vested interest.  JOHO.

​On 9/29 we noted that Samsung Display seemed to have cancelled an on-going project it had been working on for Apple (AAPL).  The project was to develop a 10.86” OLED iPad display for release in 2022 but a conflict over specifications for the panel were cited by the media as the cause for the cancellation.  Samsung’s typical OLED structure is a single RGB stack, however Apple is convinced that such an arrangement would not produce a bright enough display.  They proposed a double stack structure that is essentially two sets of OLED materials on top of each other, with Apple’s contention that the single stack structure would not be bright enough, a relatively common complaint about OLED displays, and that it would extend the display’s lifetime given the use profile for tablets.
SDC seems to have been convinced that such a product, and the changes it would have to make to its production line, would not be profitable for SDC based on its cost estimates and the expectations for potential panel sales to Apple.  We also noted that 2nd OLED supplier LG Display), would now have the opportunity to explore such development without the pressure that SDC would typically bring, particularly as LG Display has already developed a simplified dual stack structure that would be the basis for the Apple panel development.  It seems that such a project is underway at LG Display, with a target of developing a 12.9” dual stack OLED display using LTPO (Low-temperature polycrystalline oxide), but the likelihood of a 2022 product seems remote considering the early development stage, the complexity of the display, and the capacity available to LG Display. 
Perhaps if LGD is able to meet Apple’s exacting specifications, and calculates that they can profitably produce such a display for Apple for an extended period of time, we might see such a device in 2023 or 2024, but at the same time Apple is also exploring Mini-LED technology, which would likely be a bright and less expensive solution, albeit one that might not meet all of Apple’s criteria for color quality without quantum dots, so in reality the pressure never goes away.  Get cookin’.

As we have previously noted, Samsung Display (pvt) has been shipping samples of its Quantum Dot/OLED display panels to parent Samsung Electronics and other potential customers for evaluation, with the hope that they will find enough demand to justify the production of such panels at their Q1 fab in Asan, South Korea.  While the project has faced an initial lack of enthusiasm from Samsung Electronics, more recently the project seems to have been accepted wholly, with SDC committing to starting production in November and sets shown at CES 2022 in early January.
While we are optimistic about the prospects for QD/OLED, we are a bit conservative in what we believe can be produced in 2022, based on production limitations and yield more than demand.  We expect production to be 1.32m units over the next 14 months ending 12/22, with 1.28m being produced in 2022 itself.  We base these estimates on capacity and yield, using 55” and 65” displays only, as these are a logical combination using MMG (Multi-mode glass) on a Gen 8.5 line.  When actual set shipments will begin and where the sets will be released is still quite speculative, and we note that our estimates are a bit lower than most we have seen.

​Samsung Display (pvt), the producer of displays for parent Samsung Electronics’ (005930.KS) foldable products, has been receiving UTG (Ultra thin glass) from Germany’s Schott (pvt), with the material being further processed by a small Korean company, Dowoo Insys (pvt) in which it has a 50%+ stake.  That material replaced a CPI (colorless Polyimide) film supplied by Sumitomo Chemical (4005.JP) used on the first Galaxy Fold which was found to be too easily scratched.  It seems that Samsung Electronics has decided to switch suppliers again, this time developing the FTG (Foldable Thin Glass) at its own manufacturing development center, along with Corning (GLW), a major supplier of display glass to Samsung.
While unconfirmed by the company, it is said that Samsung Electronics used its FTG for the first time as a cover glass for the Galaxy Z Flip 3, with Corning supplying the base material and a well-known Korean glass processor, Econy (pvt) doing the thinning.  The glass is then shipped to a plant in Vietnam where it is cut, coated, and placed on the Fold 3 and potentially other products.  While no word on whether the cover glass for the Galaxy Fold 3 was FTG or the same Schott product used previously, we would expect that Samsung will continue to build out its own internal UTG supply chain for subsequent products.  Given the competitive nature of the smartphone space, Samsung has little choice but to find every possible point at which it can reduce costs, and if it means bypassing a subsidiary, so be it.
CPI producers are hoping that they will be able to gain some traction as rollable devices are developed, as the more extreme cover material curvature in rollables might prove difficult for UTG but also acknowledge that Samsung’s development could have an impact on CPI volumes.  They do note that yields on for UTGs are far lower than for a mature product like CPI, and that if dropped, any glass is prone to breakage.

Relationships in the display business are strange animals and the give and take between customers and producers is a tightrope walk that would give the Wallenda’s pause.  Panel producers must evaluate the cost of modifications to existing lines in light of the volumes and lifetimes of customer projects, and an over or under estimation on either the customer or producer side can result in an extended period of poor profitability.  Apple and Samsung Display (pvt) have such a love/hate relationship, with Apple always looking to broaden its display supplier list, while SDC advances its technology quickly enough to maintain a lead over its competitors and ingratiate itself with Apple.
Apple and SDC have a number of development projects, one of which is to develop a 10.86” OLED iPad for release next year.  However recent information out of Korea has indicated that the project has been cancelled due to a technology conflict between the two.  Samsung’s typical OLED structure is a single RGB stack, while Apple is convinced that such an arrangement would not produce a bright enough display.  They propose a double stack structure that is essentially two sets of OLED materials on top of each other, with Apple’s contention that the single stack structure would not be bright enough, a relatively common complaint about OLED displays, and that it would extend the display’s lifetime given the use profile for tablets.
SDC seems to have been convinced that such a product, and the changes it would have to make to its production line, would not be profitable for SDC based on its cost estimates and the expectations for potential panel sales to Apple.  Further Apple is expecting to produce two different OLED iPads, one with LTPS backplanes and one with LTPO, which would mean that SDC would have to change processes on both the OLED line (single stack to double stack) and on the backplane line where it would have to either dedicate one line to LTPS and one to LTPO or switch during production.  Based on the cost analysis for such a product and the yield SDC has been able to get on the production of 10.86” OLED panels, it looks like the project has been cancelled.
Whether this means that Apple will wait an additional year or two until LG Display (LPL) is able to bring production levels up to meet Apple’s goals is an open question. LG Display uses a two stack structure for its automotive OLED displays but has only low volume capabilities currently.  If LGD is willing to expand capacity for IT panels using a tandem structure, there is the possibility that Apple might see a way to release two OLED iPads in 2023, but LGD has to make the same profitability calculations that SDC has made and while they might be more adept at the tandem OLED structure than SDC, they would have to get some more substantial reassurances (such as expansion financing) from Apple before they go further…