Apple May Soon Get Another OLED Display Supplier

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This year, Apple (NASDAQ: AAPL) introduced the iPhone X, which included (among other standout features) an organic light-emitting diode (OLED) display. OLED displays have several advantages compared to traditional liquid crystal displays (LCDs), such as improved contrast ratios (this boosts image quality) and faster pixel response times.

However, OLEDs have traditionally been tricky to manufacture, and the only company that is believed to be able to manufacture OLED displays good enough to meet Apple's high display quality standards is Samsung Display, a group within the broader Samsung Electronics (NASDAQOTH: SSNLF) conglomerate.

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Samsung's pole position in the manufacture of high-quality OLED displays allows it to enjoy price leverage over Apple, as Apple has one else to buy OLED displays for its devices from. Apple would almost certainly like to have several capable suppliers in the mix to not only regain some pricing leverage, but to mitigate the range of other risks associated with being dependent on a single supplier -- especially one that's a sister company to a direct competitor (in this case, Samsung Mobile).

Two potential alternatives to Samsung Display -- LG Display (NYSE: LPL) and BOE Technologies have been mentioned, but there hasn't been anything definitive about if or when they'd begin supplying mobile OLED displays to Apple.

But thanks to a recent statement from LG Display, spotted by The Korea Herald, we may know soon if LG Display will be added to the mix.

We'll know for sure soon

LG Display reportedly said that "regarding an OLED supply deal for Apple's iPhone X, nothing has been set in detail." The display maker continued, promising that "when anything is confirmed in detail, we will announce it, or (otherwise an announcement will be made) in a month."

It seems, then, that the reports that Apple and LG Display were working to ink a potential deal were correct but reports claiming that a deal had already been signed were incorrect.

To be blunt, LG Display seems to be a long way off from being able to build displays up to Apple's quality standards. The OLED panel that LG supplies into the Pixel 2 XL smartphone was widely panned for poor image quality and viewing angles -- something that I can confirm from my brief time using a Pixel 2 XL show unit at a wireless carrier's store.

The Samsung-made panel on the standard Pixel 2, on the other hand, didn't suffer from those issues.

Now, of course, since Apple does a lot of in-house display engineering work, any OLED display that LG Display makes for Apple's iPhone would likely involve a considerable co-development effort with Apple itself. However, if LG Display can't get the basics of OLED display manufacturing down properly, then it's unlikely that it'd be able to produce what are arguably the best-performing mobile displays in the world for Apple.

It won't be long before we know for sure whether LG Display has cleaned up its act with respect to mobile OLED panel manufacturing. If it has, and if it can ultimately produce panels suitable for Apple's 2018 iPhones with OLED displays, then that'd be great news for Apple and LG Display -- and bad news for Samsung Display.

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Ashraf Eassa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.