Dive Brief:
- Apple is designing and producing its own MicroLED screens for its devices as part of a test project, sources told Bloomberg.
- MicroLED screens would replaced current OLED displays. The new screen technology claims to make gadgets thinner and brighter while consuming less battery power.
- The tech company's engineers have already manufactured "fully functional" MicroLED screens for Apple Watches. The goal now is to expand the technology to other Apple devices.
Dive Insight:
By designing and producing screens in-house, Apple is taking another step in integrating its value chain and decreasing its reliance on suppliers, an ongoing trend within big companies.
The tech company has recently struggled with vendor relationships, dealing with issues from intellectual property disputes to core labor violations at suppliers' factories.
In light of those problems, Apple is taking some manufacturing and sourcing into its own hands. The tech company reportedly intended to design its own power management chips for iPhones. Apple is also considering buying straight from the source of cobalt to eliminate intermediaries and distributors.
With Apple "secretly" developing the screen technology at its own plant, it gains a competitive advantage over rivals such as LG and Samsung. Samsung can't get its hands on the screens by simply striking a deal with Apple's supplier.
For now, MicroLED screen production is still in the testing phase for non-Apple Watch devices.
If Apple's project is a success, it could signal bad news for screen suppliers. The tech company's news spooked markets, with Japan Display shares falling 1.5% and Sharp Corp's dipping 2.6%. If Apple ultimately cuts ties with screenmakers in favor of in-house production, suppliers could lose revenue and be forced to overhaul their growth projections.
