What Display Daily thinks: You can’t put all your eggs in one basket. That’s a cliche that has stood the test of time and experience. In hindsight, you can come up with a number of reasons why Japan couldn’t stay competitive, but the truth of the matter is that if you are heavily reliant on one customer, in any business, it is hard to shake them off and prepare for the time when they inevitably disappear from your books.
For Samsung, BOE, and LG, the lessons of the past should have sunk in a long time ago. You would expect that all of these companies would be able to withstand the loss of Apple’s business, but is that really the case? At least for the next five years, all three existing Apple display suppliers may be relatively safe.
However, Samsung and LG feel vulnerable. When Apple launches its iPhone 16 later this month, Huawei will launch a tri-fold smartphone on the same day. Apiple’s business in China is being chipped away at and that could mean that it will have to adjust its strategy for the country, a strategically and financially important market for the company.
Could we see Apple leaning on Chinese suppliers more to curry favor in their local market? It would make sense for Apple to be more Chinese, in some ways. A bigger share of its display business going to companies like BOE can’t hurt Apple in China. Does that augur badly for Samsung and LG, mirroring the experiences of Sharp and JDI in Japan? That may happen, too, especially as Apple looks for its so-called iPhone moment with everything from AI to home robots.
Right now, it is hard to see what could possibly recreate the iPhone moment for Apple – Mark Gurman at Bloomberg News keeps harping on about the company’s pursuit of this idea which seems like a trite approach to strategy. But if anything comes remotely close to being a new iPhone for the company, it will give it the flexibility to commoditize the iPhone, increase margins even more, and drive growth by taking market share back from competitors.
That should mean a shift in production to China, and an emphasis on cost reduction that would hurt Samsung and LG the most. The Korean comapnies would be looking could at their JDI and Sharp moment, but maybe with a less dramatic ending.
Korea’s display giants should be glad that the likelihood of another iPhone moment for Apple looks very slim right now. And all the money in the world isn’t going to change that. Meta has been, arguably, spending tens of billions of dollars a year to try and find its iPhone moment with AR and VR, to no avail. Apple’s not thinking different; it’s just thinking stock price. The Korean display industry can take a sigh of relief, for now.
Apple Closing Down Japan’s LCD Industry
A recent report in Nikkei laments the loss of an industry. Japan Display (JDI) and Sharp were once key suppliers for Apple’s iPhones. About a decade ago, they held a combined market share of 70% in iPhone LCD display production, according to Nikkei. Their close relationship with Apple drove significant growth, with JDI relying on Apple for 60% of its revenue at one point. During their peak around 2015, JDI and Sharp delivered nearly 200 million LCDs annually for iPhones, making them vital players in the smartphone display industry.
However, as Apple began transitioning its premium models to OLED displays starting with the iPhone X in 2017, the demand for LCDs from these Japanese companies began to decline. By 2023, the number of LCDs supplied by JDI and Sharp for iPhones had dwindled to around 20 million annually, limited to the lower-priced iPhone SE models.
Fast forward to now, Apple has decided to use OLED displays in all its iPhone models starting next year, including the iPhone SE. This decision marks the complete phase-out of LCDs in iPhones, and Apple has already started placing orders for OLED screens from South Korean and Chinese companies, namely Samsung, BOE and LG.
The repercussions for these Japanese manufacturers are significant. JDI has recorded net losses for ten consecutive years, struggling with overcapacity due to the decline in demand from Apple. Although the company is developing energy-efficient OLEDs, its current production is limited to small displays, such as those used in the Apple Watch. Meanwhile, Sharp’s reduced capacity and shutdown of facilities underscore the broader impact of Apple’s shift away from LCDs.
