In a significant move to diversify its supply chain and reduce costs, Apple has recently established local display research labs in four major Chinese cities: Beijing, Shenzhen, Suzhou, and Shanghai. This strategic initiative, according to industry watchers, marks a substantial investment in China's display ecosystem, with contributions from major Chinese display panel companies like BOE and various equipment and material-related firms.

BusinessKorea reports this morning that Apple's decision to form an alliance with China's display industry involves an investment of billions of won to create a local research belt. This move comes as the application of organic light-emitting diodes (OLED) expands beyond smartphones to include tablets and laptops. By diversifying its supply chain, which has been heavily reliant on Korean companies, Apple aims to reduce OLED procurement costs. However, this shift raises concerns about the potential diminishing influence of Korean companies, which have been the primary suppliers of panels for iPhones, as China's technological capabilities rapidly advance through collaboration with Apple.

An industry insider commented, "These research labs are developing and testing panels for iPhones, iPads, Vision Pro, and future foldable iPhones," adding, "They are also conducting quality evaluations by comparing them with Korean panels."

The research labs are strategically located in major cities along China's eastern coast, known for their robust display industry clusters. Notably, Apple has invested approximately 2 billion yuan (about 193.5 billion won) in the Shenzhen research lab alone, with the number of personnel expected to increase to 1,000 in the future. Considering the other research labs, the total cost of establishing this research belt is estimated to be in the hundreds of billions of won.

Apple's substantial investment in China's display ecosystem is seen as an effort to rapidly elevate the level of Chinese companies and diversify its OLED supply chain, which has been dependent on Korea. Chinese companies, such as BOE, have repeatedly attempted to become major OLED suppliers for Apple but have faced challenges. For instance, BOE failed to achieve mass supply for the iPhone 15 and iPhone 16 due to quality issues. Currently, BOE supplies some quantities for the basic lineup of the iPhone 16, but at a lower price than Korean companies.

Looking ahead, it is expected to be challenging for Chinese companies to be included in the iPhone 17 supply chain. Apple plans to expand the application of low-temperature polycrystalline oxide (LTPO) OLED, an advanced technology developed by domestic companies, but Chinese companies have yet to meet Apple's expectations in this area.

Despite the current technological superiority of Korean companies, the Korean display industry cannot afford to be comparable. Chinese companies continue to push forward with a volume offensive, attempting to transition to higher quality. For the first time in the first quarter of this year, Chinese companies surpassed the Korean industry in global OLED panel shipments. The combined volume offensive and potential research outcomes between Apple and the Chinese industry could jeopardize the position of Korean companies.

Foldable displays are also emerging as the next battleground. Apple plans to apply foldable panels to smartphones by 2026, and among the Chinese companies participating in this research are those that manufacture folding test equipment for testing the durability of foldable and rollable displays. According to market research firm Markets and Markets, the foldable display market is expected to grow at an average annual rate of 23.6% until 2029.