Apple is set to switch to organic light-emitting diode (OLED) displays on all iPhone models starting next year, including the lower-priced iPhone SE models, which currently use liquid crystal displays (LCDs). According to reports from Nikkei, the move will eliminate LCD displays from iPhones entirely. The move represents a significant shift in Apple’s display strategy, moving away from LCDs and toward more advanced OLED technology.
Impact on Japanese Suppliers
The move to OLED displays means that two major Japanese suppliers, Japan Display Inc. (JDI) and Sharp, will be shut out of Apple’s iPhone business. These companies previously dominated Apple’s display supply chain, with a combined 70% share about a decade ago. But their role has diminished in recent years, with them only supplying LCDs for the iPhone SE models. With the upcoming change, their involvement in iPhone production is expected to end.
The Rise of South Korean and Chinese Suppliers
Apple has begun placing orders for OLED displays from Chinese and South Korean companies such as BOE Technology Group and LG Display. These companies are already leading suppliers of OLED technology for Apple’s premium models. Samsung Electronics, also from South Korea, currently holds about 50% of the market share for iPhone OLED displays, followed by LG Display with about 30% and BOE with about 20%. The inclusion of these suppliers marks a complete shift from Japanese suppliers to predominantly South Korean and Chinese suppliers for iPhone displays.
Advantages of OLED Technology
OLED displays are known for their ability to produce sharper contrast and more vibrant colors compared to LCDs. This is because the organic compounds in OLED displays emit light on their own, eliminating the need for a backlight. OLEDs offer a better visual experience, especially for users watching movies, playing games, or viewing photos on their phones. Samsung was one of the first companies to introduce OLED displays as a replacement for LCDs in 2009.
History of OLED Adoption on iPhones
Apple first introduced OLED panels with the iPhone X in 2017, marking the beginning of a gradual transition from LCD to OLED across its lineup. Since then, OLED displays have featured on Apple’s higher-end iPhone models, providing a top-notch viewing experience. The upcoming change will expand OLED to all iPhone models, including the more affordable SE series starting next year.
It’s no surprise that all iPhones are switching to OLED because Apple is a company that prioritizes quality above all else. So, with the difference between OLED and LCD, it was only a matter of time before Apple made the full switch. Most brands use LCDs because they are cheaper and less prone to common issues like burn-in. Since Apple is focused on quality, the OLED route is the only option.
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The fall of JDI and Sharp
The transition to OLED has been challenging for traditional LCD suppliers like JDI and Sharp. In 2015, these companies supplied around 200 million LCD panels per year for iPhones. By 2023, that number has dropped to around 20 million. The transition to OLEDs has led to overcapacity and financial losses for these suppliers. For example, JDI has suffered a decade of net losses. While the company is working to develop energy-efficient OLEDs, it currently only supplies small OLED displays for products like the Apple Watch.
Sharp is also downsizing its LCD operations. In August, the company shut down operations at its Sakai plant in Osaka, which makes large LCDs for televisions, and reduced capacity at its Kameyama plant in Mie Prefecture. Both JDI and Sharp are now focusing on other markets, such as LCDs for automotive applications, as they revamp their business strategies.
Growing Market for OLED Displays
The OLED display market is expanding rapidly. According to UK-based market researcher Omdia, OLED displays will surpass LCDs in the number of panels shipped for smartphones for the first time this year. The increasing demand for OLEDs is driven by the superior image quality they offer and the growing consumer preference for high-quality displays on smartphones.
As OLED technology continues to improve, it is becoming more affordable, making it a viable option for a wider range of products. Apple’s decision to switch to all-OLED displays for all iPhone models reflects this trend and demonstrates the company’s commitment to improving the user experience with high-quality displays.
Future Implications for Apple and Its Suppliers
The full transition to OLED displays on iPhones is a significant step for Apple. Not only does it align with the company’s strategy of offering premium products, but it also sets a standard for other smartphone manufacturers. The move is likely to push other brands to adopt OLED technology more widely to stay competitive.
For suppliers, this shift presents both challenges and opportunities. South Korean and Chinese OLED manufacturers are likely to benefit from increased demand and larger orders from Apple. Meanwhile, traditional LCD suppliers like JDI and Sharp will need to adapt their strategies to stay relevant in a market that is rapidly moving toward OLED.
Solution
Apple’s decision to switch all iPhone models to OLED displays marks a major shift in the smartphone industry. By phasing out LCDs and embracing OLED technology across its product line, Apple is setting a new standard for display quality on smartphones. This move will impact not only Apple’s supply chain, but also the broader market for smartphone displays, spurring innovation and competition in the space. As Apple continues to push the boundaries of technology, its suppliers and competitors will need to keep up to meet the changing demands of consumers.