Apple Can Maintain at Least 60% Dependence on Korean Displays

The Impact of Apple's Component Insourcing on the Display Industry

Apple is pushing for in-house technology development of semiconductor and display components and pursuing component internalization, but a public research institute has forecasted that dependence on domestic companies such as Samsung and LG will be maintained in the display sector.

[Image source=Yonhap News]

On the 25th, the Institute for Information & Communications Technology Planning & Evaluation (IITP) announced in its report titled "The Impact of Apple's Component Internalization on the Semiconductor and Display Industries" that a new player called "Apple" has emerged in the display market in the long term. It judged that Apple is pursuing display internalization following semiconductors.

In the IT industry, there is a forecast that by the end of 2024, or at the latest 2025, Apple Watch Ultra could be equipped with a self-designed micro LED display instead of the existing OLED. Apple acquired the startup LuxVue Technology in May 2014 and started the micro LED project under the codename "T159" in 2017, aiming to apply micro LED to its next product lineup. The plan is to apply the self-developed micro LED display to other upcoming products such as iPhone and iPad, starting with the Apple Watch.

In this case, the prevailing view is that domestic companies will inevitably be impacted. The share of Apple in domestic display companies is over 50%, with Samsung Display at 21% and LG Display at 30%. In particular, Samsung Display supplies about 70% of the displays for Apple iPhone 14, while LG Display is known to supply displays corresponding to about 80% of Apple Watch and 32% of iPad.

If Apple secures design technology and adopts a contract manufacturing method for micro LED, similar to its approach with semiconductors, there is a risk of reduced volume for LG Display, the main supplier of Apple Watch OLED displays. However, from another perspective, it could also open new revenue channels. The report explained, "Since LG Display accounts for about 80% of Apple Watch display supply, the volume for LG Display will inevitably shrink and be impacted if Apple adopts micro LED. However, if LG Display wins orders for Apple's micro LED and undertakes contract manufacturing, it could emerge as a new revenue source by compensating for the disadvantage in the LCD market, where it has been losing to Chinese companies."

The fact that display internalization could take a considerable amount of time is also a reason why the impact on the domestic display industry is expected to be limited. The report analyzed, "Compared to the current panel prices for smartwatches, the price of watch panels applying micro LED technology is expected to be much higher, so the actual application timing is anticipated to be after 2025. Also, introducing micro LED to medium-to-large screens has low production cost efficiency and pricing issues, making rapid expansion to larger-screen products like the iPhone difficult in the short term." Furthermore, it added, "Mass production of micro LED requires a large increase in investment costs, so Apple will inevitably continue to procure displays from Korean companies for the next several years." It stated that Apple's dependence on Korean display companies could be maintained at a minimum of 60% or more.

Meanwhile, regarding Apple's semiconductor independence, the report stated, "It could weaken the market dominance of fabless (semiconductor design) companies such as Intel, Qualcomm, and Broadcom and empower foundry (semiconductor contract manufacturing) companies like TSMC," urging the Korean government to strengthen policies such as supporting the growth of promising fabless companies and enhancing the capabilities of the system semiconductor ecosystem.

This content was produced with the assistance of AI translation services.