Apple Is Interested in Japan Display's LCDs for Some iPhones Next Year

Apple Inc. has expressed interest in buying advanced liquid-crystal displays from Japan Display Inc. for some iPhones next year, people knowledgeable about the matter said, a sign the technology has life despite competition from a newer type of display.

Japan Display said last month that the advanced displays, which it calls Full Active, would account for more than 70% of its business in panels for smartphones and other smart devices in the year ending March 2019. Japan Display has said in a regulatory filing that Apple accounted for about 54% of its revenue in the year ended March 2017.

Asked at a Tuesday news conference about customers for the Full Active displays, Kazutaka Nagaoka, chief of Japan Display's mobile unit, said clients so far were mostly Chinese handset makers including Xiaomi Inc., which he said used the panel for its Mi Mix 2 phone. He declined to discuss potential clients from other regions.

People at companies that work with Japan Display said interest about Full Active LCDs has also come from Apple. That is why the display maker is predicting rapid uptake for Full Active, they said. Apple declined to comment.

It is still too early to say what kind of iPhones Apple might unveil next year and what displays they would use. The company typically plans years in advance for future iPhone models, but doesn't commit to designs until around March the year a new phone launches, according to people familiar with the development process. Components and features can continue to change as the manufacturing process ramps up.

Analysts expect Apple and other smartphone makers to shift gradually to newer organic light-emitting diode, or OLED, screens, in part because it is easier to make curved or angled screens using OLED and because the newer technology may offer displays with more contrast.

However, cost and supply issues are likely to slow down any transition, analysts say.

Japan Display argues that its improved LCD screens can match or exceed some of OLED's advantages at lower cost. In Full Active, the bezel or border space around each edge of the screen has been trimmed to 0.5 millimeters, the company says, compared with as much as several millimeters on older LCDs. Minatake Kashio, director of Tokyo-based consultancy Fomalhaut Techno Solutions, said current OLED smartphone panels have a bezel of about one millimeter.

Japan Display is working on a version of Full Active that it says would match the OLED technology in enabling phone makers to offer curved screens.

Apple's iPhone 8 series, introduced this month, uses liquid-crystal displays, while its new iPhone X uses an OLED screen. Some technology reviewers and buyers have criticized iPhone 8 as too similar to older models.

The iPhone X's OLED display is made by a division of Samsung Electronics Co.-- an uneasy situation for Apple because Samsung is also a rival in the consumer market. Mr. Kashio of Fomalhaut Techno Solutions said components of the iPhone X's OLED display cost about $110 a unit, about twice the price for a liquid-crystal display.

Japan Display says it plans to start mass-producing OLED screens in the year beginning April 2019. Meanwhile, it is counting on Apple and other smartphone makers to buy its liquid-crystal displays.

Japan Display's reliance on Apple puts it in a precarious position that has proved problematic for other suppliers. Apple can be a boon for suppliers because it makes more than 200 million iPhones a year, but when it changes components, it can send shares of its suppliers tumbling.

Imagination Technologies Group PLC supplied Apple with technology to process graphics in iPhones, but shares of the British chip designer fell more than 70% in intraday trading in April when it said Apple would stop using Imagination within 15 months to two years. Imagination agreed last week to be bought by a China-backed investment firm.

Tripp Mickle contributed to this article.

Write to Takashi Mochizuki at takashi.mochizuki@wsj.com and Yoko Kubota at yoko.kubota@wsj.com

(END) Dow Jones Newswires

September 28, 2017 00:56 ET (04:56 GMT)