Could Apple Drop OLED in Future iPhones?
While not a total bust, Apple's (NASDAQ: AAPL) iPhone X has clearly not lived up to the "supercycle" hype and now analysts are scrambling to cut estimates on the device. One reason for the less than stellar performance could be the $1000 price tag. This has lead to speculation Apple could drop the OLED display in favor of LCD to save on costs.
Lynx Equity Stratigies' Jahanara Nissar said the high cost of the OLED display is a prominent reason for iPhone X’s high price. Nissar explains there is a well-understood yield problem associated with the OLED process driving up the cost. Also, with Samsung being the sole supplier this hasn't helped. "It is a testament to the immaturity of the OLED process that no other supplier has made it to the Apple supplier list so far," she commented. While media reports suggest Apple’s could also be working with LG on OLED, they are not aware if LG has been qualified. Also, OLED displays are known to consume more power than LCD. "In addition to its intrinsic higher cost, elimination of OLED display in favor of LCD could allow a smaller battery, and thus lower cost further," the analyst commented.
A recent blog post suggested Apple will return to emphasizing the LCD model as the flagship. While Nissar has not independently verified this, she said it appears reasonable. "We believe, when designed correctly, an LCD display can indeed have similar or even superior color gamut and user experience as an OLED display," Nissar said. The analyst further notes it was well-understood that the delayed roll-out of iPhone X was due to yield issues with Samsung’s OLED process. "Reverting to an LCD focus, we believe eliminates display-induced supply-chain risk at Apple," the analyst added.
The iPhone X comes with two-distinct differentiators over lower-priced iPhone models - Face-ID and OLED screens. Of the two, Nissar believes Face-ID is here to stay. "The fate of OLED though remains a question," she said. Also comments from Samsung at CES, that it expected its OLED capex to be down this year, takes on renewed relevance if the fate of OLED at Apple is in some question.
Related Stocks:
Universal Display (NASDAQ: OLED)
StreetInsider Premium first published a variation of this article on Jan. 24 at 8:17AM ET. Try StreetInsider Premium for two weeks free here.