Apple and Samsung are among the most unhappy partners in the tech world, but their “marriage” continues because of Apple’s demand for advanced screens, according to The Information.
While Apple has long relied on the South Korean electronics giant for key components for the iPhone, it has also waged a long-running court battle against Samsung, accusing it of stealing Apple’s patents in its own line of smartphones. The companies settled their legal dispute five years ago, with Apple finding other partners to supply some components in its devices, such as memory chips, or replace other Samsung components, such as processors, with its own designs.
However, a complete breakup is not possible, as Apple still needs Samsung to supply an important component: displays for iPhones and other devices. This also makes for a very tense and delicate relationship between the two companies.
According to several former Apple employees, Samsung was so distrustful of Apple that it banned Apple engineers from entering Samsung factories. In one incident in 2017, Apple engineers flew from the U.S. to South Korea to meet with employees of Samsung’s display division but were told they were not welcome to enter its facilities, including its office buildings, because Samsung had to protect its intellectual property around a screen technology known as organic light-emitting diodes (OLEDs). According to a former Apple employee with knowledge of the matter, Apple engineers were forced to talk to their Samsung counterparts remotely from their hotel rooms in South Korea.
Apple has spent the last few years trying to move away from its dependence on Samsung OLED screens and looking for other suppliers such as LG, Japan Display (JDI) and BOE, but none of these manufacturers could meet Apple’s requirements for quality, quantity and price.
OLED screens are one of the most advanced display technologies available, offering higher contrast, lower power consumption and thinner thickness. Apple began using OLED screens on the Apple Watch in 2016 and has gradually expanded to other product lines, such as the iPhone, iPad Pro and MacBook Pro.
However, Samsung is the world’s largest manufacturer of OLED screens, with about 80% of the market share. This means that Apple must pay Samsung a high purchase price and has difficulty bargaining with it. Apple reportedly pays Samsung about $10 billion a year (currently about RMB 69.1 billion) for OLED screens.
In order to reduce costs and improve bargaining power, Apple has been looking for other reliable OLED screen suppliers. LG has started supplying OLED screens for some iPhone models, but its production capacity and quality are still not as good as Samsung’s. JDI has been unable to put them into mass production because of financial woes. BOE is one of China’s largest display manufacturers, but its products have failed Apple’s stringent testing standards.
Samsung’s strengths in screen technology and production give it more power in its relationship with Apple than most of Apple’s supply chain partners. In general, Apple suppliers must take “the financial risk of storing and absorbing the cost of unwanted parts,” but that’s not the case in the relationship with Samsung.
One former Apple employee said Samsung forced Apple to buy hundreds of thousands of additional screens several years ago, even after Apple cut demand forecasts for MacBook displays.
In another incident, Samsung shipped “millions of LCDs to Foxconn” for the first retina screen version of the iPad mini, but Apple found “minor defects” in the displays. Samsung refused to replace the screens, leaving Apple with “no choice but to use the panels. A few years later, a similar incident occurred with the MacBook display, forcing Apple to suspend mass production until the company could select the best quality display for use.
Over the years, Apple has made several attempts to get rid of Samsung, but all have failed. One of those attempts occurred when Apple wanted to use microLED display technology instead of OLED in the iPhone X. Initially, Apple wanted to use MicroLED instead of OLED in the iPhone X. While OLED allows for better overall image control compared to LCD, according to a former Apple executive involved in discussions about Apple’s display roadmap, some executives within Apple Some Apple executives don’t like OLED displays because they’re hard to see in sunlight.
After acquiring LuxVue in 2014, Apple staffed the MicroLED project with top talent, many of whom have PhDs in fields such as physics, chemistry and electrical engineering. A year later, Apple purchased a small display factory in Taiwan from Qualcomm to learn how to make displays.
The plan to use MicroLED on the iPhone X never came to fruition. Several people who worked on the project said the high cost of making MicroLEDs, combined with how long the manufacturing process takes and the high potential for defects, led to delays, although Apple has been doing its best to overcome these obstacles for years.
Nevertheless, Apple has not given up on finding an alternative. Apple reportedly plans to use BOE-produced OLED screens when it launches the fourth-generation iPhone SE in 2023. In addition, Apple is continuing to work on MicroLED technology, which could provide higher efficiency, longer life and better visuals for displays.
However, Apple will still need to rely on Samsung to meet its demand for high-end OLED screens for the foreseeable future. The two companies compete and cooperate, creating a unique and complex relationship in the technology world.
