Display makers dip on report Apple OLED shift in 2019

[TOKYO] The shares of Japan Display Inc, Sharp Corp and other display suppliers for Apple Inc fell after South Korea's Electronic Times reported that the iPhone maker has decided to use next-generation screens for all of its new models next year.

If true, Apple's move would be negative for JDI and Sharp, which have so far not been able to mass produce OLEDs and currently supply LCD screens. Samsung Display Co, part of Samsung Electronics Co, has so far been the sole provider of organic light-emitting diode displays for use in iPhones. JDI shares fell as much as 21 per cent, the biggest intraday drop since its 2014 market debut. Sharp declined as much as 3.6 per cent, while Samsung was down 1.2 per cent.

A shift to all OLED screens for iPhones would be challenging, given the sheer volume of the devices that Apple sells each year. While Samsung Electronics is the sole supplier of OLED screens for high-end Apple phones, the manufacturer also uses the displays for its own smartphones. At the same time, competitors such as LG Display Co have struggled to move into mass production. LG Display rose 5.9 per cent, the biggest intraday gain in four months.

"Ultimately, the plan is for Apple to go full OLED on its iPhones as far as I know but whether that's going to happen at this point is a question mark," said Jerry Kang, a senior principal analyst at IHS Markit based in Bundang, South Korea. "Apple hasn't been able to expand on its iPhone X production because of market demand and price issues."

Indeed, the cost of OLED technology has been a major concern. Sales of the iPhone X with an OLED screen were crimped by its starting price of US$999. Moving to all OLED screens next year would make it difficult to keep iPhones affordable for mass market consumers.

Jeff Pu, an analyst at Taipei-based Yuanta Securities Investment Consulting, said he doesn't see Apple shifting to OLED screens for its entire lineup. Even with two OLED models next year, that means Apple will need to raise the overall price tag and face the risks of selling fewer iPhones, he said.

"It is unlikely that Apple will be releasing three OLED models next year as LG Display is unlikely to significantly increase its OLED production for Apple from 5 million to 10 million units expected this year," Mr Pu said.

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