Long time iPhone supplier suffers financially from decision made by Apple

Long time iPhone supplier suffers financially from decision made by Apple
A major decision made by Apple has taken its LCD panel supplier Japan Display from the penthouse to the outhouse. Back in 2014-2015, when the Apple iPhone 6 and iPhone 6 Plus brought a new design and larger LCD screens to iPhone users, Japan Display started to build a new factory in the middle of the country. Citing sources inside Japan Display, Reuters reports that Apple gave the firm $1.5 billion to use for the construction of the new plant, to be repaid from some of the money that Japan Display would receive from sales of its panels.

As it turns out, Apple's decision to switch to OLED displays for 2017's iPhone X and last year's iPhone XS and iPhone XS Max has left the new facility running at only 50% of capacity. And while the more affordable iPhone XR does feature a 6.1-inch LCD display, sales of the device have not been as strong as estimated. With the best battery life found on any iPhone, a powerful A12 Bionic chipset under the hood, and a single lens camera on the back that produces outstanding photographs, the iPhone XR should have been a big hit. But a number of things outside of Apple's control have dampened sales of the device, hurting Japan Display in the process.

For example, the strength of the U.S. Dollar against the Chinese Yuan meant that to keep its margins, in China Apple had to initially price the iPhone XR above the cost of higher spec'd phones such as the Huawei Mate 20 Pro. In addition, the U.S.-China trade war continues to hurt the country's economy. Lastly, a rise of nationalism in China over U.S. attacks on Huawei and the arrest of the company's CFO in Canada led to an unofficial boycott on Apple products in China.

And now, the future for Japan Display looks bleaker than it ever has. The company still owes Apple money for the $1.5 billion that the U.S. tech giant laid out to help its supplier build the new factory. One of the sources inside the firm says that the decision to build the new plant was the correct one at the time. "In retrospect, the new plant was unnecessary, but the decision wasn’t wrong back then. Japan Display started to pick up steam thanks to Apple at the time, and Apple wanted the new plant."

Japan Display hopes to get a cash infusion from a Chinese investment firm


What has also hurt Japan Display is that it made its decision to expand into OLED panels too late. And its bread and butter product is facing heavy competition. For example, back in 2015 Japan Display was responsible for the LCD screens on 33% of Huawei's handsets. Now, that figure is down to 4% thanks to the improved panels turned out by Chinese competitors like BOE Technology and Tianma Microelectronics.

Starved for cash, Japan Display is trying to work out a deal with China's Silkroad Investment Capital, according to another two unnamed sources that spoke with Reuters. In return for close to a majority stake in Japan Display, Silkwood would invest $500 million to $700 million in the company. The Investment group would then build an factory churning out OLED panels in China using Japan Display's technology.

Japan Display wasn't alone among companies in Apple's supply chain that saw big profits ahead because of the strength in sales of the iPhone 6. One person working at an Apple supplier said "We were all thrilled to see lifetime sales of a single iPhone model reaching 100 million units. Supplying components for just one model in massive volume is extremely cost-efficient,” he said. “At the same time, we exposed ourselves to huge volatility risks."

There are rumors that Apple was going to use OLED panels on all three of the upcoming 2019 iPhones, which are expected to carry the same screen sizes as the current models. However, the latest word from top Apple analyst Ming Chi-Kuo says that the iPhone XI and iPhone XI Max will sport OLED panels and the iPhone XR (2019) will have an LCD display.

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23 Comments

1. Venom

Posts: 3272; Member since: Dec 14, 2017

Never place all your eggs in one basket.

2. iloveapps

Posts: 724; Member since: Mar 21, 2019

They should know that oled is the next thing after lcd and microled is the future.

9. Venom

Posts: 3272; Member since: Dec 14, 2017

I wish LCD would still be used. I prefer it over LED. My Nokia 7.1 uses LCD and it has one of the best screens on a phone comparable to the price.

11. tedkord

Posts: 17198; Member since: Jun 17, 2009

Comparable to the price is the key phrase there.

13. Venom

Posts: 3272; Member since: Dec 14, 2017

Well I was being modest. I find that the midrange segment is better than the flagships. There I said it.

17. sgodsell

Posts: 7032; Member since: Mar 16, 2013

LCD is inferior to OLED. OLED can give you things like an always on display. OLED can save battery power. LCDs have a tiny contrast ratio, and is the major reason why LCDs don't support HDR. As far as the iPhone XR is concerned, and when Alan said. "the iPhone XR should have been a big hit. But a number of things outside of Apple's control have dampened sales of the device," Really Alan, out of Apple's control? Come on, Apple overpriced the iPhone XR to begin with. Put a lousy low resolution LCD display. Lowered the specs overall, other than the A12 SoC. And you wonder why the iPhone XR isn't selling well.

19. Mike88

Posts: 228; Member since: Mar 05, 2019

It's not,, OLED displays are always better,, the only good lcd display which can compete with super Amoleds is the liquid retina display in ipad pro 2018 and iphone XR....they look better than Amoleds sometimes ( unless one is watching content with black background.)

20. Atrixboyyy

Posts: 587; Member since: Nov 03, 2011

Not sure what displays you been looking at but LR displays are just high res LCD displays nothing more ..

21. sgodsell

Posts: 7032; Member since: Mar 16, 2013

Mike88 you must work for Apple, or your love of all things Apple has blinded you. I noticed you avoided the HDR part completely. That's because Apple's LCDs suck. The contrast ratio is only 1400:1 vs Samsungs OLEDs that give you a contrast ratio of 1000000:1. Try and dance around some more mike88, I am sure someone believe your lies that Apple's LCDs are comparable to Samsung's OLEDs.

23. mackan84

Posts: 282; Member since: Feb 13, 2014

Does hdr mean that much on a 5-6 inch display. Go check iPhonedo review of galaxy s10 and he’ll ahow you why lcd is better for most part. Shake your hand in front of your OLED and you’ll see it flickering. I have OLED on my phone and couldn’t care less if it was lcd. Their great too, what matters is anything above 9 inch where I can watch movies and photos. Bad photos always seem decent on this small screens until you watch it on your computer or tv and see it is a mess.

5. cncrim

Posts: 1585; Member since: Aug 15, 2011

That is why you need a term contract. Just face it, any business will do the same thing. It is easly when bull market but when bear market thing get cut.

7. darkkjedii

Posts: 30902; Member since: Feb 05, 2011

I still have my Max, and the intel modem still sucks.

8. Venom

Posts: 3272; Member since: Dec 14, 2017

Yeah I get it darkk, you want the much needed attention that you aren't getting irl.

3. RoboticEngi

Posts: 1251; Member since: Dec 03, 2014

That's what happen when you do business with apple.....

4. cncrim

Posts: 1585; Member since: Aug 15, 2011

That’s happen to any business customers vote with their pocket and OEM must listen or die. Ask HTC what happen once you are stubborn.

16. Doakie

Posts: 2478; Member since: May 06, 2009

Hate to say it I kind of smiled inside when I read this article because of my hatred for all things Apple... I thought to myself, "That's what they get for working with the devil." What does one call oneself when they are an Apple Bigot?

6. Byakugan unregistered

The Tianma LCD on my Redmi Note 5AI is bad i get image retention/presistence less than a month using the phone

10. chris2k5

Posts: 240; Member since: Nov 17, 2012

News about S10 overheating is disappointing. Hope it doesn’t catch fire.

12. tedkord

Posts: 17198; Member since: Jun 17, 2009

What really disappoints you is all the reviews calling it the best phone available, and specifically better than a certain other phone, and the real world speed tests where it beats that phone.

15. Doakie

Posts: 2478; Member since: May 06, 2009

This comment is retarded and has nothing to do with Apples display decisions. BE GONE TROLL!

14. shawman

Posts: 40; Member since: Sep 18, 2012

I have Tmobile S10 and no overheating. but I am not a gamer. But play Netflix HD/youtube etc. Awesome phone and display. Camera night mode not good(needs update from Samsung) but Google Camera port is great for night photos.

18. Ichimoku

Posts: 145; Member since: Nov 18, 2018

Still LCD is the best for a smartphone in my opinion.

22. sgodsell

Posts: 7032; Member since: Mar 16, 2013

How can LCD be the best, especially when it doesn't support HDR for videos and movies. Plus OLED can have an always on display, whereas LCD can't. OLED can save power. Try to remember that when an LCD display is on, the entire display is on. Therefore LCD is inferior to OLED.

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