[ET NEWS] Apple has picked LG Display as a secondary OLED supplier for iPhone following its recent decision to invest in the Korean display maker’s new OLED production line, industry sources said on July 31.
The two firms are reportedly finalizing details, including the type of the funding and amount. The Investor earlier reported Apple would invest around 3 trillion won (US$2.7 billion) as advance payment for the planned panel supplies.
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LG Display on July 25 announced 15 trillion won investment plans for OLED production. Of the increased 45,000 units of the sixth-generation sheet that can produce 54.36 million units of the 6-inch smartphone screen annually, about 30,000 units are expected to be supplied for iPhone possibly from 2019.
With Apple’s funding, LG Display can secure cash for the huge initial spending on building new facilities, but there are also some risks.
Even though the two firms agree on annual shipments, sources say, that doesn’t mean a guarantee for Apple’s purchase. If the OLED iPhone sells less than expected and the panel orders are reduced, LG Display may have to offer compensation for Apple’s facility investment.
According to sources, the situation is different compared to their partnership on LCD. Currently, Samsung Display is the sole OLED supplier for Apple -- a rare case for the iPhone maker that has maintained a multi-vendor system for key parts. China’s BOE is also beefing up production, but the yield rate lags far behind that of Samsung and LG.
“The 45,000 unit production seems to have been made from a conservative perspective on Apple orders to reduce risks,” an industry source told ET News on condition of anonymity.
“LG Display’s annual facility spending is expected to almost double to 7-8 trillion won. The two firms are expected to agree on the final deal conditions in a way to minimize risks.”
LG Display declined to comment on the supply deal with Apple.
By Bae Ok-jin (email@example.com) (firstname.lastname@example.org)
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