Apple gets second supplier for OLED iPhone screens, lessening reliance on Samsung

Apple will soon land a second supplier for the organic light-emitting diode (OLED) screens used in high-end iPhones, according to people familiar with the matter, a key step in the US company’s push to reduce manufacturing costs for its flagship product and its dependence on Samsung Electronics.

South Korea’s LG Display will initially supply between 2 million and 4 million units, small relative to Apple’s sales, as it continues to work on ramping up capacity, said one of the people, who asked not to be identified because the matter is private.

That would, however, help Apple gain leverage in price negotiations with Samsung, the sole supplier of OLED displays for the iPhone X and Apple’s primary rival in smartphones.

The expense of that component is a key reason iPhone X pricing starts at US$1,000 and sales have reportedly not met initial expectations.

A successful supply deal would help both Apple and LG. The Cupertino, California-based company would be able to buy significant volumes from LG for next year’s iPhone model, as it tries fight off a slump in smartphone sales. LG needs a fresh source of revenue as it battles a slide in the price of liquid crystal displays (LCDs).

“Securing a second supplier for OLED screens is crucial for Apple as it will allow the company to reduce its reliance on Samsung, which is currently the sole supplier,” said Jerry Kang, a senior principal analyst at IHS Markit. “At the same time, it will help accelerate a broad adoption of OLED screens. More suppliers means more volume, and in turn, lower pricing.”