It's being reported today in a Korean news report that shares of LG Display have fallen 6.7 percent on news that Samsung Display has just signed a deal with Apple to supply OLED (organic light-emitting diode displays) for next generation iPhones.
The Samsung displays are expected to replace the liquid crystal display panels used in the current iPhones that are produced by LG Display. LG currently produces almost 40 percent of the iPhone display panels. Even though the Samsung-Apple deal had largely been expected, it seems unavoidable that it would have a negative impact on LG Display's profits in the future – at least initially.
In December we reported that Apple was on the cusp of signing deals with both LG and Samsung for OLED flexible displays and over time LG and others will be added to Apple's supply chain. Earlier this month Foxconn finalized their acquisition of Sharp and it was reported that they'll be hoping to be included in Apple's OLED supply chain by some in 2020. So while the Samsung deal isn't an exclusive deal, it's definitely an important one at this juncture as it acts as an anchor deal to ensure that Apple could launch new iPhones with an OLED display on Apple's schedule.
According to today's Korean news report, "Samsung will supply an annual 100 million OLED panels, worth 3 trillion won ($2.6 billion), to Apple from the second quarter next year for three years.
Despite its leadership in larger OLEDs that are used for TVs and digital signage, LG has little presence in the smaller OLED market that is currently dominated by its archrival Samsung."
In a secondary Korean news report we learn that "Samsung Display is considering building a separate production line to produce organic light-emitting diode displays exclusively for Apple's iPhone. The facility will start operation within the second quarter of this year to have a production capacity of 120,000 panels per month."
Kim Dong-won, an analyst at Hyundai Securities stated for the report that "Samsung will invest more than 10 trillion won ($8.7 billion) into the A3 plant to double its production capacity."
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