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Apple’s 10th anniversary iPhone is largely expected to feature an edge-to-edge OLED display — but that move could cost Cupertino around $50 million in 2017’s second quarter.
That prediction comes from analyst Timothy Arcuri, who said the cost could potentially be a “pinch point” for Apple despite gross margins remaining flat at just under 39 percent, according a Cowen and Company memo sent to investors and obtained by AppleInsider.
OLED technology offers a number of advantages over traditional LCD displays, among them sharper contrast ratios, quicker refresh rates, and lower power consumption. Still, there are few OLED manufacturers that are equipped to deal with the sheer scale and demand that Apple would require.
One company that could is Samsung — currently the world’s largest supplier of OLED displays. Back in July, iDrop News reported that the Korean company would ship nearly 40 million OLED display units to Cupertino by early 2017. Similarly, Sharp Corporation’s CEO, Tai Jeng-wu, said that the Japanese company is building out OLED manufacturing facilities in Japan, and is prepared to produce OLED panels in the U.S. if Cupertino needs them to.
“If our key customer demands us to manufacture in the U.S., is it possible for us not to do so?” Jeng-wu told students at Tatung University in October.
Apple’s demand for OLED displays is expected to be so great that many underdog manufacturers, like Vivo, Oppo and Huawei, are scrambling to secure OLED panels. Between Apple, Samsung and other manufacturers, there will likely be an OLED supply shortage in 2017, according to a source familiar with Apple’s supply chain.
As far as Apple’s bottom line, the company will release Q1 2017’s quarterly earnings results on Tuesday, Jan. 31. In the Cowen and Company’s investor memo, Arcuri predicted that Apple will report 76 million iPhone shipments during the first quarter.