Americans now spend more time using mobile devices than watching television, clocking an average of 3 hours 43 minutes a day, meaning they likely touch a smartphone screen more than anything else – except perhaps a keyboard. That screen, especially on flagship devices like the latest Google Pixel 4 or iPhone 11 Pro, is more than just glass. Beneath the surface is a technology that is widely hailed as the future of electronic displays: the organic light-emitting diode (OLED). OLED displays are superior to prevailing liquid crystal displays (LCDs) because they deliver more vibrant visuals, allow for thinner devices, have faster response rates, and provide greater energy efficiency. OLEDs also underpin the emergence of devices with flexible screens, a market projected to grow 35-fold by volume between 2019 and 2025. Despite their superior performance, OLEDs are still expensive compared to LCDs, and much more so at larger sizes. For example, the OLED is the most expensive component in an iPhone X, according to IHS Markit, representing nearly 30 per cent of the total cost of production. Production of OLED displays is presently driven mainly by smartphones but costs could fall quickly as demand for the technology rises in areas such as wearables, televisions, tablets, virtual reality headsets, autonomous vehicles, and even military-use control panels and head-mounted displays. Reaching cost-parity with LCDs would effectively commoditise OLEDs. Yet few policymakers give much thought to the geoeconomics of these screens, a key input in our all-consuming digital economy. More serious consideration of OLED supply chains is needed, particularly as trade conflicts rage in East Asia and as China becomes a high-tech manufacturing power. No OLED screens for Japan if trade dispute is ‘pushed to extreme’, expert warns A concentrated supply chain, for example, can give leading firms greater control over vital inputs, offering their home governments leverage over access, pricing, and technical standards. For the United States, any disruptions to OLED supply chains threaten to increase consumer prices, disrupt American businesses, and even hamper certain military operations. Currently, producers worldwide are racing to establish themselves as reliable and cost-effective suppliers, in anticipation of a smartphone OLED display market that is expected to skyrocket from 390.6 million units shipped in 2016 to 812.4 million units by 2021. The share of smartphones fitted with OLEDs is expected to rise from 17 per cent in 2015 to 43 per cent by 2024, creating an industry that will be worth US$59 billion, more than quadruple its value in 2015. The downstream assembly of OLED displays is highly concentrated in East Asia, largely because South Korea’s Samsung has dominated the industry, accounting for over 90 per cent of global output. This first-mover advantage is not likely to last though, as China’s BOE, a state-owned firm, is rapidly closing the gap. It recently became the world’s second-largest producer. And China now accounts for 53 per cent of global investment in small-to-mid-sized OLED manufacturers, surpassing South Korea’s share of 40 per cent. While the US does not compete with East Asia in downstream manufacturing, US firms are actually key suppliers of the midstream inputs for OLEDs, according to the “Supply Chain Jigsaw” project of MacroPolo, the Paulson Institute’s think tank. Corning, for instance, manufactures 47.6 per cent of display glass (Gorilla Glass being its most famous product); UDC, Dow DuPont, and Merck produce a combined 45 per cent of the organic materials that are fundamental to OLEDs; and Synaptics makes 8 per cent of the integrated circuits that power these displays. Wall Street fears Trump’s tariffs will disrupt Apple supply chain So, East Asia and the US are both crucial locations for OLED production, but both are areas where the commercial logic of globalised supply chains is being challenged by economic nationalism and technology competition. In fact, current trade disputes may even contribute to China’s rise as a dominant node in OLED supply chains, a potentially concerning development given Beijing’s history of coercive economic statecraft. It is no secret that Beijing has long sought to cultivate domestic champions in high-tech industries, while the US-China trade war has accelerated Beijing’s desire to achieve self-reliance. BOE’s access to concessionary state financing, which has propelled a US$10 billion production drive, provides an advantage over foreign competitors in what is a very capital-intensive industry. Beyond production subsidies, China is also an enormous smartphone market that is home to leading brands like Huawei and Oppo, which tend to source OLEDs from local suppliers, whether for political or commercial reasons. Another factor that could tilt the market in BOE’s favour is the escalating hostility between Seoul and Tokyo since July. Japan, which controls around 90 per cent of the global market for fluorinated polyimide, a chemical used in flexible OLEDs, has prohibited its export to South Korea. Amid rising doubts about Samsung’s reliability, smartphone makers are accelerating their search for new suppliers. Apple has made overtures to BOE, as well as Japan Display, South Korea’s LG, and Taiwanese companies. But BOE’s size means it stands to be the main beneficiary. China will invariably play a greater role in these supply chains, because the future of OLEDs belongs to those companies that can quickly expand capacity and improve yield. How much the industry will ultimately tilt toward China is difficult to predict, but if the goal is to ensure the emergence of a competitive OLED market that is not dominated by China or any other country, the US can consider certain actions to precipitate this outcome. How AI and human rights have been dragged into the US-China tech war First, Washington could offer diplomatic support to address high-tech supply chain issues in the Japan-Korea trade impasse. Second, the US could leverage bilateral trade negotiations to encourage American investment in a range of South Korean and Japanese producers. Third, it could follow South Korea in considering limits to the transfer of midstream OLED technology to non-market economies, as BOE acquired its initial capabilities from a Korean supplier to Samsung. Finally, for the longer term, it could increase funding for domestic research and development in OLED displays to ensure that US firms advance their competitive edge and commercial leverage in display glass, organic materials and integrated circuits. The average American consumer checks their smartphone 52 times each day, meaning OLEDs are set to become the indispensable digital interface to our professional and personal lives. A screen may seem mundane, but there is valuable, and potentially vulnerable, technology sandwiched between its thin layers of glass and plastic. Washington may need to think harder about how to protect US firms’ positions in the midstream of OLED display supply chains while minimising the risks of sourcing these displays from a region beset with trade conflicts. Neil Thomas is a Research Associate at MacroPolo, the think tank of the Paulson Institute in Chicago. 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