TOKYO -- New iPhone models no longer excite Japanese parts makers as much as before, as their dominance as Apple suppliers has been eroded over the years with the rise of South Korean and Taiwanese rivals.
The U.S. tech giant unveiled new iterations of the iPhone series Tuesday. A key selling point of the iPhone X, the new flagship model, is the use of an organic light-emitting diode display, instead of a liquid crystal display.
The top-of-the-line iPhone will be the first in the series to adopt an OLED. Only the iPhone X will come equipped with this display device for now, but another OLED-equipped offering is expected to be added next year. These cutting-edge display panels will be supplied solely by South Korea's Samsung Electronics.
This is bad news for Japanese LCD manufacturers. Japan Display, the largest supplier of LCD panels for iPhones, is facing a roughly 30% year-on-year drop in panel shipments for the smartphones in 2017. Sharp, another Japanese LCD supplier, is expected to suffer a similar decline. Both companies are hurrying mass production of OLEDs, but probably won't be able to supply them until 2019 at the earliest. Meanwhile, South Korean makers are gradually eating into Japan's share of the display market, a field it once dominated.
In addition to a revamped design, new features such as wireless charging have led Apple to use glass for the back casings for the new iPhone models rather than the magnesium alloy seen on previous versions. The beneficiary of the switch is Taiwan's Catcher Technology, whose processing techniques improve the strength of glass. Catcher's revenue rose 21.7% in August.
New iPhones are not all bad news for Japanese suppliers, though. The new iPhones are said to use more of Murata Manufacturing's capacitors and Alps Electric's camera parts. The duo, as well as other Japanese companies that possess proprietary manufacturing technologies, continue to get orders from Apple, since their specialized materials and parts are difficult to replace.
Japanese parts makers were hit hard when Apple decided to decrease iPhone production at the end of 2015. Some companies began specializing in high-value-added products, while others began to court Chinese smartphone makers to reduce their reliance on Apple.
However, downgrading the relationship with Apple comes with a risk. If Japanese parts manufacturers cannot remain suppliers of key iPhone components, their competitiveness likely will weaken, as the U.S. tech giant continues to play a leading role in innovations in the smartphone market.