China's BOE Planning 100M+ iPhone Comeback
BOE's Ambitious Plan to Become a Major iPhone Display Supplier
Chinese display manufacturer BOE is making a significant push to increase its production of OLED screens, aiming to become a major supplier for future iPhone models. This ambitious plan is part of BOE's strategy to regain a substantial role in Apple's supply chain after a setback in 2022.
The 2022 Setback and the Road to Recovery
In May 2022, Apple temporarily removed BOE from its iPhone 13 supply chain. This action followed the discovery of unauthorized design changes made by BOE. Faced with component shortages and difficulties maintaining production yield, BOE widened the circuit width of the thin-film transistors in its panels without Apple's approval. This breach of contract prompted Apple to halt BOE's production.
Following this incident, BOE worked diligently to regain Apple's trust. Their efforts eventually led to approval to supply OLED panels for the iPhone 14, though initially in smaller quantities. According to the UBI Research's China Display Trend Report, as reported by ZDNet Korea, BOE is determined to significantly increase its role in future iPhone production and capture a larger share of Apple's competitive display market.
Massive Production Capacity Expansion
BOE has focused its iPhone panel production at its B11 fabrication plant in Chengdu, Sichuan Province. This facility has undergone substantial expansion, now boasting 26 OLED module lines dedicated exclusively to Apple. Of these lines, 11 are currently in mass production, with an additional three used for research and development. Each line is capable of producing approximately 350,000 panels monthly. This translates to a potential monthly output of around 8 million iPhone displays for BOE.
Assuming a 90% utilization rate and an 85% yield, BOE's annual production capacity for iPhone displays could reach at least 100 million units. This significant increase in capacity demonstrates BOE's serious commitment to becoming a key player in the iPhone display market.
Impact on the Competition and Apple's Negotiating Power
Currently, Samsung Display and LG Display, both based in South Korea, are Apple's primary suppliers of OLED panels for iPhones. BOE's return to Apple's main production plans is expected to introduce price competition, giving Apple greater leverage in negotiations with its existing suppliers. This increased competition could lead to lower costs for Apple, potentially resulting in lower prices for consumers or increased profit margins for Apple.
Beyond price, BOE is also focusing on improving the quality of its displays to close the gap with Samsung and LG in terms of brightness, energy efficiency, and long-term durability. These improvements are crucial for gaining and maintaining Apple's confidence and securing a larger market share.
The Path to Becoming a Primary Supplier
While BOE's re-entry into Apple's supply chain is positive, their success is dependent on consistently meeting Apple's rigorous quality and reliability standards. BOE's share of the iPhone display market has gradually increased with each new iPhone generation. However, their involvement in the initial shipments of new iPhone models remains limited.
For the iPhone 16, BOE's role during the initial launch was not significant, and a similar scenario is anticipated for the iPhone 17. A substantial increase in BOE's supply share is therefore more likely to occur with the iPhone 18 next year, provided they consistently meet Apple’s stringent requirements.
Conclusion
BOE's ambitious plan to become a major iPhone display supplier represents a significant shift in the dynamics of Apple's supply chain. While challenges remain, BOE's substantial investment in production capacity and its focus on quality improvements demonstrate its determination. The success of this strategy will not only impact the pricing and availability of iPhones but also reshape the competitive landscape within the display manufacturing industry. The coming years will be crucial in determining whether BOE can fully achieve its goal of becoming a primary supplier of OLED displays for Apple's flagship product.
This article, "China's BOE Planning 100M+ iPhone Comeback" first appeared on MacRumors.com
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