Apple Emphasises Quality – And Pays For it

The cost of manufacturing the display for the Apple Watch (Display Monitor Vol 21 No 36) is ‘several times’ higher than equivalent LCD or glass-based AMOLED screens, says NPD DisplaySearch. The screen is a plastic-based 1.5″ OLED from LG Display (Display Monitor Vol 21 No 37).

Apple seems to have ensured that its product uses components with significant benefits. The display module is around 65% thinner and lighter than an LCD unit, and 50% thinner and lighter than a typical AMOLED. It is also rugged. However, these advantages come with a price: DisplaySearch calculates that the cost of the display production is $7.86 per unit. Other components, such as the touch interface and cover lens, add $19.55 to that figure, for a total cost of $27.41.

Cost is highly dependent on yield rates (DisplaySearch estimates them at 60%). The production process for high-res, flexible AMOLED displays is difficult, with complicated steps such as encapsulation and laser lift-off. Yield rates are expected to rise as the manufacturing process matures. Material costs will also fall.

OLED smartwatch display shipments are forecast to reach 11 million units this year – a 450% YoY increase. As well as the Apple Watch – representing 8 million units, as the company builds inventory for next year’s launch – Samsung’s new Gear and LG’s G Watch will boost shipments. However, due to their small size, smartwatch display shipments are not expected to have a significant affect on overall OLED demand.