Apple’s vertical integration strategy, bringing as much of its production process in-house as possible, has been evident in its chip designs for Apple Silicon. However, the tech giant continues to rely on Korean display makers.
A recent report from the Institute for Information & Communications Technology Promotion suggests that the company won’t be following the same strategy for its displays. Despite attempts to gain more control over how parts for devices like the iPhone and iPad are made, Apple will still rely on South Korea for its displays.
Apple to rely on Korean display makers for years to come
The report suggests that Apple is trying to bring display component designs in-house, but it’s still very early. The IITP considers that Apple has become a new player in the display market, at least when viewed over the long term. While entering the market, the report believes at least 60% of its components will be sourced from Korean display makers for several years.
This might seem like a setback for Apple’s push for vertical integration, but it could be an opportunity for Korean display makers to catch up with their Chinese rivals. The report suggests that if domestic display makers can outsource Apple’s microLED production, it could give them the advantage they need to compete in the market.
Apple is said to be starting to use in-house microLED displays for the Apple Watch as soon as the end of 2024, though there are still obstacles in the way. Apple may take a lot of time to commercialize its technology completely, and with the raised cost of production, the report thinks it will more likely arrive in 2025.
Apple has been working on microLED since 2018, or possibly earlier due to a 2014 acquisition of LuxVue, and the company reportedly invested $334 million into a Taiwanese factory in 2020 for mini LED and microLED display panel production.
The state-run agency also refers back to Apple’s chip efforts, adding that its push for chip independence “could weaken the market dominance of fabless companies like Intel, Qualcomm, and Broadcom, and empower foundries such as TSMC.”
With a chip support bill in place, Apple will be keen to seek local production, and this could prompt TSMC into producing some chips for Apple in the U.S., despite its complaints against terms affecting its Arizona plant.
It remains to be seen how this will affect the display market in the long run, but it seems like Apple will still rely on Korean display makers for its displays for the foreseeable future. As Apple continues to invest in in-house technology, we’ll likely see more components designed and produced in-house. However, it’s clear that for now, Korean display makers will continue to play a critical role in Apple’s supply chain.