As the advanced touchscreen has become central to the success of a smartphone or tablet, shortages of displays have been a major headache for OEMs. Samsung has the advantage of controlling its own Super AMOLED technology, and the limits on AMOLED availability have driven some vendors to other solutions ‘ HTC to SuperLCD, Apple to another LCD-based option, RetinaDisplay. Apple has not only secured this exclusive screen technology but is now looking to safeguard iPhone and iPad volumes by investing heavily in displays.
Citing comments made by COO Tim Cook at the company’s quarterly earnings call, IHS iSuppli calculates that Apple has committed $3.9 billion over two years to secure production of RetinaDisplay. It is tapping not just the original supplier, LG, but also Sharp and Toshiba, says the analyst firm, in deals that guarantee volumes until the end of 2012. The company already paid out $650 million on the deal in the December quarter and will pay another $1.05 billion in March. This mirrors similar arrangements that Apple has with suppliers of flash memory, which have also helped tie up supplies for the iPhone and iPod, sometimes putting pressure on rivals’ supply chains.
“In the era of the iPad and iPhone, the user interface ‘ particularly the display and touchscreen ‘ has become the most critical competitive differentiator for tablets and smartphones,” said Vinita Jakhanwal, director for small and medium displays at IHS, in a statement.
The research firm estimates that Apple spent nearly $2bn on displays for its iPad and iPhone in 2010, sourcing LCD panels from LG, Samsung, Sharp and Toshiba Mobile Display. Many of these panels are based on IPS LCD, whose production is limited to suppliers with an IPS license. This factor has limited supply, though to a lesser extent than Samsung AMOLED panels, which have “gone into a state of critical shortage.’.
Apple’s bid to ensure its own stocks could raise the fears of its rivals. The two key technologies, IPS (In-plane Switching) LCD and AMOLED, will each have a major smartphone OEM effectively placing first call on supplies. This could force firms to follow HTC in exploring other vendors and platforms ‘ HTC still uses AMOLED in many models, but also has SuperLCD from Sony in others.
“With Apple trying to invest in assuring IPS supply, and Samsung Electronics having preferential access to small- and medium-sized AMOLED supply, the rest of the smartphone makers are caught between the two giants,” Jakhanwal said. “This has left other OEMs to resort to other technologies when it comes to advanced displays, giving Apple and Samsung a huge edge in product differentiation in a highly competitive market.”