Apple still in need of Korea-made displays despite production push

An Apple logo adorns the facade of the downtown Brooklyn Apple store in New York. (AP-Yonhap)

US tech giant Apple will likely continue its reliance on Korean-made displays, although it has been making a “sweeping effort” to develop its own components for more direct control over its designs, a report showed Tuesday.

According to a report released by the Institute for Information & Communications Technology Promotion, Apple is expanding its use of in-house components such as chips and displays in its flagship iPhones as part of a strategy to maintain its dominance in the market.

The IITP said that Apple has emerged as a new player in the display market when seen from a long-term perspective. However, it will continue to source at least 60 percent of its components from Korean display manufacturers such as Samsung Display and LG Display for the next several years.

The US tech giant’s transition to micro light-emitting diode display technology away from the existing organic light-emitting diode displays for Apple Watch Ultra can be a new opportunity for Korean display makers in the microLED market, the report said.

Apple is planning to start using its own in-house microLED displays on its smartwatches as early as the end of next year.

The IITP believes that it may take some time for Apple to completely commercialize its self-made display technology. Compared to the current price of smartwatch panels, the price of watch panels using microLED technology is expected to be much higher, so the US tech firm will likely apply the technology after 2025, it said.

"Apple is expected to outsource display production to Korean vendors in the coming years to save the costs necessary for mass production,” the report said. "If domestic display makers can outsource Apple's microLED production, it could give them the advantage to catch up with their Chinese rivals."

Yet competition among chipmakers will likely intensify with the US tech giant introducing its own smartphone components, the report said.

Apple, which started off as a hardware manufacturer with Mac computers and smartphones, has led innovation in the software sector with its own operating system. It is also building its own chips ecosystem by designing and developing its own mobile application processors and M-series chips for MacBooks.

“Apple’s push for chip independence could weaken the market dominance of fabless companies like Intel, Qualcomm and Broadcom, and empower foundries such as TSMC," the report said, calling for policies that can support the growth of promising fabless companies and strengthening the capacity of the system chip ecosystem.

While the majority of chip components used in iPhones have been designed and manufactured in the US, the country's chip support bill will create more room for Apple to seek local production, according to the state-run agency.

It further noted that the legislation would force TSMC -- the world’s No. 1 foundry company -- to produce some of its chips for Apple in the US, as the Taiwanese foundry generates about 26 percent of its sales from Apple.

By Jie Ye-eun(yeeun@heraldcorp.com)