South Korean Suppliers Get Orders From Apple for OLED Components
February 20, 2017
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In November, we noted that Apple had chosen three South Korean companies to supply the flexible PCB boards for the iPhone 8 (aka iPhone X), beating out Taiwanese and Japanese rivals.  The three companies mentioned, Interflex, BHE and Samsung Electro-Mechanical were, in theory, chosen for their expertise and cost structure, but hints that their experience in the OLED space for Samsung and LG might have helped them win the business. Now it seems that Samsung Electro-Mechanical and LG Innotek have been selected to supply dual camera systems for LG Electronics, Samsung Electronics, and LeEco are in talks with a number of Chinese brands that are interested in developing dual camera phones.  While Samsung Electro-Mechanical saw a loss in the 4th quarter due to the Note 7 recall, it has been supplying dual camera systems to Xiaomi since 3Q 2016, and as mentioned above, is in talks to supply similar product to Huawei, Oppo and other Chinese smartphone vendors, and expectations are for 2017 sales to double in 2017. LG Innotek, the 1st dual camera system supplier back in 2011, has been supplying Apple since 3Q 2016, and has posted record results in 4Q 2016, also driven by LG’s G6 smartphone pre-release production.  Overall, estimates for dual camera smartphones come in between 250m and 350m units for 2017, and with such high visibility devices being produced by the two South Korean companies, they both should see significant incremental sales in 2017, as the concept of improved rear camera capabilities becomes a marketing tool for high-end smartphones going forward.
 
The latest OLED panel maker being targeted by Apple as the #3 supplier, after Samsung an LG is reportedly, Beijing based BOE, which has a number of OLED production and R&D projects in development. They have a Gen 5.5 LTPS OLED line in Ordos, and a Gen 6 line in Mianyang, and a Gen 6 line in Chengdu, along with a pilot line in Hefei. The capacity at the Ordos project is small, although a substantial increase is expected during the Q317 and the Chengdu OLED fab is also expected to begin production this year, at least at the phase 1 level, but the Mianyang lines are a bit further out, likely close to 3Q 2019, and will be focused on flexible OLED production.  BOE has been relentless in its development of LCD technology over the last few years, and while their OLED production will likely remain somewhat limited this year, they have the potential to become a substantial supplier in the 2018/2019 timeframe. Apple is probably testing BOE’s OLED product, as Apple would evaluate any available OLED product from a panel maker that they have qualified.  But this is a far cry from actually ordering panels, which would have to be comparable to Samsung’s very sophisticated device.   

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