Apple is on the cusp of inking a fresh new deal with LG Display. The South Korean display-maker will supply Apple with [potentially] millions of high-end organic light emitting diode (OLED) displays for this year’s plus-sized iPhone X-styled flagship, according to a new Bloomberg report.
Sources familiar with the matter, who requested anonymity given the private nature thereof, Apple and LG Display Co. have agreed to a tentative deal that will see LG initially supply the iPhone-maker with between 2 and 4 million OLED display panels in 2018, with the possibility of expanding orders by millions of units more as LG works to fully develop and ramp up its OLED manufacturing capacity.
Apple’s move to lasso LG Display Co. into its OLED supply chain is primarily intended to help the company leverage current and future price negotiations for OLED panels from Samsung whose display division is currently Apple’s exclusive supplier of 5.8-inch Super Retina OLED displays for iPhone X.
The deal, which sources say could be finalized within the first few weeks of July, is expected to benefit both Apple and LG, with the iPhone-maker benefitting from its ability to purchase “significant quantities” of OLED panels from LG (allowing it to drive a harder bargain with Samsung) and LG benefitting from a new source of revenue as it seeks to bolster capital amid a sharp decline in LCD orders.
“Securing a second supplier for OLED screens is crucial for Apple as it will allow the company to reduce its reliance on Samsung, which is currently the sole supplier,” Jerry Kang, a senior principal analyst at IHS Markit, told Bloomberg.
“At the same time, it will help accelerate a broad adoption of OLED screens. More suppliers means more volume, and in turn, lower pricing.”
LG Display will supply Apple with OLED panels exclusively for the company’s upcoming iPhone X Plus, reports CNET. And while 2 to 4 million units is likely a fraction of the total number of iPhone X Plus devices Apple will sell this year, LG ultimately hopes to ramp up its production of OLED displays in order to secure Apple’s business for the foreseeable future.
The shipment is subject to two layers of approval, Bloomberg’s sources confirmed, noting that the first is expected around the beginning to middle of July.
Both Apple and LG declined to comment on today’s report. However, LG Innotek Co. — a direct supplier to LG Display — was able to reverse its losses on the South Korean KRX Stock Index during Thursday trading on the news, while shares of Samsung Electronics fell roughly 2.4 percent.
Apple is widely expected to release three new iPhone models this fall, including 5.8- and 6.5-inch units boasting OLED display panels — the larger of which, some analysts predict, is poised to prompt a massive upgrade supercycle.