Apple’s star power impacted OLED adoption in smartphone market
Apple’s decision to adopt flexible OLED display for the iPhone X really influenced the OLED display market even though they were not the first brand to use them. Samsung and LG introduced that kind of display a few years before. Samsung was also very successful with its Galaxy series smartphone products with OLED display. Samsung Display has been the most successful supplier for rigid and flexible OLED panels. Still, the anticipation of Apple’s adoption of OLED displays changed the industry atmosphere even before the official introduction. More Chinese brands started to adopt OLED display for smartphones. More capital and increased production capacity was dedicated to flexible OLED. Apple’s entry opened up flexible OLED display’s potential to go from niche to mainstream. However, slower than expected sales of the iPhone X has resulted in major cuts in factory utilization rates and even slower expansion plans for OLED display in 2018.
Apple empowered the smartwatch market with OLED display
Apple was not the first company to introduce a smartwatch, nor was it the first to use an OLED display for its product. The market had already started a few years ago with smartwatch products from brands such as Samsung, LG, Sony, Pebble and many others. Samsung and LG used OLED displays in their smart watches. Still, the category did not receive acceptance from mainstream consumers' due to high price, a lack of fashionable design and lack of functionality.
After Apple’s entrance to the smartwatch market, using an OLED display, in April 2015, the industry’s expectation for growth accelerated. Apple was able to stir consumer’s interest with a fashionable design, more apps, a flexible retina display, taptics, health sensors and connectivity to its loyal customers’ iPhones. However, in the first year, sales were way lower than the industry’s original expectation. This was due to the high price, lack of killer applications and the need for attachment to the smartphone.
Smartwatch displays can use LCD, ePaper, or OLED technology. But products from Samsung, LG and Apple helped OLED to win the battle with LCD. OLED dominance was based on thin designs, a slimmer form factor, flexibility, lower power consumption, better black levels and better viewing angles. The 'Apple effect' resulted in a strong expansion for the smartwatch market as well as expansion of OLED display. Samsung Display and LG Display, both started ramping up capacity for flexible OLEDs for use in smartphones and smartwatches. Apple started using LG Display’s panel for its smartwatch. LG Display announced major investments (KRW1.84 trillion, $1.6 billion) in OLED panel production at the end of 2015. So, Apple empowered the smartwatch market and OLED got a boost due to Apple’s adoption.
The smartwatch market experienced strong growth but is still waiting for product innovations
The smartwatch market saw very high double-digit unit growth in 2015 and 2016. Growth rates have slowed down in 2017 but stayed at the low double-digit level. Apple's dominance has increased with strong growth but many suppliers were forced to exit the industry. Health and fitness have been the major applications for smartwatches but other applications such as mobile payments and messaging are increasing, although without mass appeal yet. The Mobile World Congress in February 2018 saw very few announcements about new smartwatches. Brands are waiting for technological innovations and connectivity before introducing new products. Apple’s series 3 Apple watch with cellular connectivity gave some ability to operate untethered from the smartphone, contributing to demand. Smartwatches are still just “nice to have” products. The growth of standalone and innovative products with more apps and lower prices could boost demand.
OLED shines in smartwatches but microLED has potential
Smartwatches and activity trackers have a real need for thinner, lighter, lower powered flexible displays. OLED display technology already shines in this category with products such as the Apple watch, Samsung Gear watch, LG watch and many others. Smartwatch displays are small in size but they need high resolution and higher brightness for outdoor use with long battery life. microLED will be able to meet these requirements and it is expected to exceed OLED in terms of brightness and power consumption.
microLED as an emissive display does not need a backlight and it is the most energy efficient display technology with a long life. It has the potential to be developed at a lower cost using semiconductor fabs to produce LEDs and get higher yields with lower capex.
microLED can bring significant improvements in brightness, color contrast, and energy efficiency compared to LCD and even OLED. This potential for thinner, lighter, brighter and high resolution displays with improved color gamut and longer battery life makes it the ideal display for the mobile and wearable application market. microLED can also allow the embedding of other components to make intelligent displays, enabling innovative product designs. But microLEDs are not yet in mass production and have manufacturing and cost challenges.
Apple's star power can potentially help microLED display
microLED, with its exceptional potential, faces many challenges such as the need for new low cost designs and manufacturing processes, mass transfer-related yield issues and supply chain issues. Intense R&D work is going on. Display suppliers, LED suppliers as well as device manufacturers are all working to bring microLED potential to reality, but it will take time. Apple is reported to be working on microLED after acquiring Luxvue. (Apple and Micro LED - The Saga Continues) News sources have recently reported the possibilities of an Apple partnership with PlayNitride and TSMC for microLED display production that may come by the end of 2018 or by 2019.
If a future Apple watch does shift to microLED from OLED it will have significant impact on the display industry. microLED success will depend on its ability to scale up for volume production with competitive price performance. Apple’s star power can be a double edged sword in establishing microLED as a volume technology with increased adoption rates. Success will bring substantial gains; problems could bring real pain for the industry. - Sweta Dash
Sweta Dash is the founding president of Dash-Insights, a market research and consulting company specializing in the display industry. For more information, contact firstname.lastname@example.org or visit www.dash-insight.com