TAIPEI -- Apple is planning to use advanced organic light-emitting diode displays in all new iPhone models launched from the second half of 2018, according to two industry sources.
One said that Apple is tentatively looking at releasing three new models next year. Apple did not respond to an email seeking comments.
Apple has started to design new iPhones for release in 2018, but its plans are subject to change. The company has a record of tweaking product specifications and lineup along the way, staying flexible to accommodate market forces and component quality.
Sources in the OLED production equipment industry suggest that panel makers may not be able to produce enough to meet demand if Apple uses OLED displays in all new iPhones in 2018.
This year, Apple will use OLED display only in its premium handset, which will offer a high screen-to-body ratio without the iconic home button. The two other models it will release will continue to sport liquid crystal displays, and these are expected to be sold into early 2019.
Taipei-based Yuanta Investment Consulting said shipments of new iPhone models in the second half of 2017 will reach 90 million, half of which will be OLED handsets.
OLED provides a sharper color contrast than LCDs and is bendable. If Apple's 2018 plan is implemented, that will almost certainly mean OLED will become the mainstream display for first-tier smartphone brands and their top-range handsets.
Samsung wins big
That shift will mark a major triumph for Samsung Electronics and its unit Samsung Display, which have invested substantially in the technology over the past few years.
In 2016 alone, Samsung's capital expenditure for display technology reached 9.8 trillion won ($8.43 billion). Samsung released its first smartphone with OLED display in 2010. Since then OLED has become an essential feature in Samsung's high-end smartphones.
Last year, Chinese smartphone brands have also started using OLED displays in their premium products. Samsung monopolizes the market for global OLED smartphone displays, and it will be the sole screen supplier for Apple's premium handset this year. The company said it expects its OLED business to enjoy an increase in revenue in 2017 from the year before.
On Tuesday, the South Korean conglomerate said in a statement that Samsung Display is reviewing plans to establish a new OLED manufacturing site in Asan, South Korea, by 2018.
Mirae Asset Daewoo analyst Kim Chul-joong wrote in a recent note that Samsung Display is expected to increase its investments in OLED panels gradually, by expanding production lines at its existing A3 plant as well as building new A4 and A5 plants.
Kim said the company would expand production capacity for flexible OLED panels to 135,000 per month by the fourth quarter by adding new lines in its A3 factory. He also said the A4 factory will be able to produce 60,000 more panels per month by the third quarter of 2018.
Samsung Display declined to comment. It is unclear whether Samsung will remain the exclusive OLED supplier in 2018 even though other rivals are still struggling to churn out OLED panels for smartphones. Apple usually prefers more than one supplier for a single component. The two companies are also locked in fierce competition in the global smartphone market.
The Korean Herald reported on Monday that Apple is mulling investing 2 to 3 trillion won ($1.75 to $2.62 billion) in LG Display to help foster the development and production of OLED panels. Earlier on, market watchers suggested Apple was likely to help boost LG Display's OLED capabilities.
LG Display declined to comment. LG Display, together with Japan Display Inc. and Foxconn-controlled Sharp Corporation, now supply LCDs for iPhones.
JDI seen affected
While LG Display may be getting a helping hand from Apple, JDI and Sharp seem to face a more uncertain future in their iPhone panel business.
JDI and Sharp are also trying to advance their display technologies, but it is unclear when these two companies will be ready to churn out OLED panels for smartphones in large quantities.
Market watchers suggest Samsung has at least a three-year lead over its competitors in OLED display technology.
JDI and Sharp will continue to see demand for smartphone LCDs, although they may need to target the lower range of the market.
Both companies will still be able to supply LCDs for older Apple handsets next year and well into 2019, although demand could fall with the arrival of OLED iPhones. Chinese smartphone makers will also need LCDs for mid-tier and entry-level products as OLED is more expensive and supply is still tight.
A Sharp spokesman declined to comment, while a company executive said it was not likely Apple will be using OLED screens for all new iPhones next year. A JDI spokesperson also declined to comment.
At least Sharp's parent company may still stand to benefit from Apple's new direction. Foxconn, or Hon Hai Precision Industry, will be the sole assembler responsible for making the OLED iPhones this year. Hon Hai's superior manufacturing capabilities gives it an edge over its smaller rivals going into 2018.
Among iPhone's current panel suppliers, JDI appears to be the one that will face most trouble next year given Apple's growing use of OLED. Apple accounts for more than 50% of JDI's revenue.
JDI was formed in 2012 by the government-backed Innovation Network Corp. of Japan, combining the embattled display units of Hitachi, Sony and Toshiba.
But the new display entity struggled to deliver profits consistently. JDI has lost money for three straight years, and its stock is down more than 70% since it was listed in 2014.
In late 2016, INCJ announced it will prop up JDI with an additional capital injection of up to 75 billion yen ($663 million), and merge the panel maker with JOLED, an INCJ subsidiary focusing on OLED printing technology.
Nikkei staff writers Kensaku Ihara and Cheng Ting-fang in Taipei, Kotaro Hosokawa in Tokyo, Kim Jaewon in Seoul, and Emi Okada and Natsuko Katsuki in Osaka contributed to this report