Japanese suppliers are under pressure to build up production operations
In today’s technology driven world most high-end smartphone are fitted with an energy-sipping organic LED display, unless that is if you have an iPhone. Apple Inc aims to change this in 2017 and to do so they need to get their hands on millions of OLED screens.
This, in turn, is upsetting their Japanese suppliers, who are under lots of pressure to build up manufacturing operations. Apple, which usually prefers to have multiple vendors, is in negotiations with Sharp Corp. and Japan Display Inc., which is moving to build up its OLED production capabilities.
The initial costs for these suppliers could reach $2 billion each, stretching their finances even before they get any firm orders from the mobile phone giant.
But if they want to keep up they have no choice but to comply. “If the companies are not going to invest in OLED, it will mean they will be compelled to leave the smartphone supplier business altogether,” as per Takeo Miyamoto, an analyst at MUFJ Morgan Stanley.
Stocks of both JDI and SMBC rose sharply on Monday to their highest in almost three months.
Liquid-crystal displays or LCDs are used virtually every phone is a thing of the past in mobile technology, whereas it is still very much the standard for Televisions. The smartphone industry is shifting away from this to the versatile option which is OLED’s, because of its ability to use less battery power while delivering sharper and brighter images.
The most expensive handsets usually feature OLEDs, as they are flexible, this leads to the probability of bendable phones amongst other innovations in the sector.
Apple which has lingered behind its competitors in adopting OLEDs. Google’s new Pixel phones and Samsung’s Galaxy S7 feature OLED screens, along with dozens of models from Oppo, Motorola, HTC, and other manufacturers.
Samsung Electronics Co. currently commands the lion share of the market for smartphone OLEDs, but Samsung isn’t just the largest supplier of the screens, it’s also Apple’s biggest competitor in the smartphone industry, making it even more critical for Apple to secure new providers if it wants to use OLEDs for iPhones.
Apple is stated to be in discussions with Samsung to ensure OLED displays.
Sharp’s capital investment in OLED is part of 200 billion yen expansion that the manufacturer had already pledged to OLED technology, part of a strategic plan it adopted with new owner Foxconn Technology Group.
The opportunity is huge for the OLED-smartphone display market which will be worth $18.6 billion in 2018, surpassing LCDs.
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