Samsung will ramp up production of OLED displays by more than 50 percent to meet demand from Apple (NASDAQ: AAPL) and other smartphone vendors, according to a report from Nikkei.
The South Korean electronics giant will reportedly spend nearly $7 billion to churn out more next-generation display panels after Apple "apparently approached the company" to provide them for a new iPhone. Apple had told suppliers that it planned to use OLED displays in a phone starting next year, "but a partial 2017 release is now planned," Nikkei reported.
Apple was widely expected to move from LCD to OLED in the next few years, but Nikkei reported in March that the company was ahead of schedule and was in talks with both LG and Samsung in a deal estimated to be worth $12 billion. Apple is expected to introduce a new flagship handset this fall.
Ditching LCD in favor of OLED could provide several benefits for Apple. The technology could be used to make thinner, more flexible displays with curves rather than straight lines with right angles. OLED also requires less power than LCD, boosting battery life, and it supports more vivid colors.
The move could provide a bit of a boost for Apple, which is struggling as the growth of smartphone sales flattens in the mature markets where the iPhone has thrived. Analysts expected iPhone sales to fall for the first time during the first quarter of 2016, and Morgan Stanley's Katy Huberty predicted in December that sales of the iconic handset will shrink by 3 percent this year.
The news follows Foxconn's March agreement to buy Sharp Corp. for $3.5 billion in a move widely seen as a big win by Foxconn's crucial iPhone production business. Foxconn is a major iPhone supplier and manufacturer but doesn't make displays, and the acquisition appeared to center on Sharp's production of liquid crystal displays. If Apple pivots toward OLED displays rather than LCD for its iPhone, it could spell trouble for Foxconn.
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