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Will iPhone Production this Year be Affected by Shortage of OLED Panels?

A scenario appears to be emerging where Apple Inc may be caught in a diplomatic row between Japan and South Korea which could lead to a short supply of OLED display panels for its iPhone models. There is nothing Apple can do in this matter since a couple of important chemicals required by the OLED panel makers in South Korea are being denied by a Japanese government fiat.

Two of the Three Models Will Have OLED Displays

Apple is following a trend these days where its iPhone releases in September each year comprises three models, one standard version, one premium version with a ‘Max’ suffix and a lower or budget version which is being called ‘XR’. While the last name comes with the conventional LCD display, the other two sport the OLED displays. The US giant relies on companies like Samsung and LG is South Korea to supply it with these OLED display panels.

Apple iPhone

Unconnected Dispute Between Japan and South Korea

In a development completely unrelated to this, a decision handed out by the Supreme Court in South Korea against the Japanese government has prompted the Japanese to retaliate by placing restrictions on the export of fluorinated polyimide and resist and high-purity hydrogen fluoride (HF) by Japanese companies to South Korea. These are critical inputs in the manufacture of the OLED panels and the official communication to this effect may get released by the Japanese government any time soon. The worrying part for the South Korean companies is that Japan virtually enjoys a monopoly over the manufacture of these chemicals and their production of OLED panels will definitely be impacted by this move.

Alternate Arrangements Inadequate

Apple may be fully aware of this issue and may even be taking steps to mitigate the crisis. There is an arrangement in place with a Japanese company that makes display panels including OLED displays. However, observers feel this company, Japan Display, may not be in a position to meet Apple’s requirements. For the record, the current understanding between Japan Display and Apple covers only the LCD Retina Display panels and not OLED, though the Japanese company possesses the basic capability to make the OLED panels.

Apple OLED screens

With the easing of trade tensions between the USA and China, particularly over the Huawei issue, the Chinese giant will be able to again mount an aggressive challenge to Apple in the coming weeks. This OLED supply chain issue would have been the last Apple would have wanted.

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