Apple gets into Micro Displays Manufacturing in Taiwan to Cut Reliance on Samsung

iPhone Maker makes billion-dollar Bet on Micro-LED Screens

· Micro-LED displays are less power-hungry and can be made thinner than organic light-emitting diode (OLED) displays, the current state-of-the-art technology.

· Mass transfer step involves moving at least tens of thousands of tiny micro-LED chips onto substrates.

· Micro-LED chips are at least 100 times smaller than the components used in LED lighting products and one production method involves fabricating them directly on wafers.

· Company plans to introduce the screen technology on its Apple Watch first, with a tentative target to have the technology ready by 2025

Apple is getting involved in the mass production of next-generation displays to lessen its reliance on rival Samsung and increase its own control over the supply of a key component, Nikkei Asia has learned.

Taking a hands-on approach to production is a stark contrast to the iPhone maker's usual approach of providing display makers with screen specifications and leaving the actual production to them.

Apple has spent heavily on the development of micro-LED displays over the past decade and once production starts, it intends to perform the critical "mass transfer" step of the manufacturing process itself, according to sources involved in the project.

Micro-LED displays are less power-hungry and can be made thinner than organic light-emitting diode (OLED) displays, the current state-of-the-art technology. They also offer better outdoor brightness performance and can be used on curved or foldable surfaces, according to people in the industry.

The mass transfer step involves moving at least tens of thousands of tiny micro-LED chips onto substrates. This process will be carried out at Apple's secretive R&D facilities in the Longtan District in the northern Taiwanese city of Taoyuan, according to multiple people with direct knowledge of the project.

Displays are one of the most expensive components in all of Apple's devices. Since the American company first introduced OLED displays on its iPhone in 2017, its reliance on Samsung Display for the screens has only grown. To reduce that dependence and gain price-bargaining power, Apple tried to bring in other suppliers, namely LG Display and China's display champion BOE Technology, but they lag the South Korean leader in terms of technology and quality stability, according to multiple sources familiar with the situation.

"Apple has spent at least $1 billion on the R&D and samples for micro-LED technologies in the past nearly 10 years," said one of the people who has been directly involved in the project for years. "It wants to secure more control over the next-gen display technologies for its future products."

Micro-LED chips are at least 100 times smaller than the components used in LED lighting products and one production method involves fabricating them directly on wafers. For the project, Apple is partnering with suppliers like ams-Osram for micro-LED components, LG Display for the substrates -- also called backplates -- and Taiwan Semiconductor Manufacturing Co. for 12-inch wafers.

In addition to designing the driver integrated circuits for the micro-LED screens, Apple even designed some of the production equipment itself to better control the mass transfer process, according to two of the people with direct knowledge of the matter.

"It doesn't mean that Apple will always do the mass transfer on its own. But it shows how determined Apple is to allocate resources to have more control over [these] next-gen display technologies in its own hands," one of the sources said.

Apple has R&D teams for displays in the U.S., Taiwan and Japan, sources said. The team in Taiwan has more than 1,000 people and the Taiwanese government approved Apple's application to expand its R&D facilities in 2020. In addition to micro-LED technologies, the Longtan facilities are also where Apple, in partnership with TSMC, has developed micro-OLED display technologies for its augmented reality devices, Nikkei Asia reported previously.

Apple's micro-LED technology is still at the sample stage, and the company plans to introduce the screen technology on its Apple Watch first, with a tentative target to have the technology ready by 2025, five people said. However, there are still many challenges for mass production, they added.

"Apple's ultimate plan is to introduce the technologies on its iPhone, which is its key revenue source and has much bigger volume, to justify the investments over the years," said one of the sources who has seen samples of the company's micro-LED screen.

Eric Chiou, a veteran display analyst at research agency TrendForce, said micro-LED chips are extremely small, so it is possible to further integrate the display with sensors to provide features such as fingerprint recognition or health-related sensing functions on wearable products like smartwatches. Micro-LED technologies can also be used on foldable smartphones, he added.

"Apple has been investing in micro-LED technologies for years and based on the company's previous moves, it often deployed a new technology on more than one product," Chiou told Nikkei Asia. "Apple is one of the few brands that hasn't introduced foldable OLED devices. The technological characteristics of micro-LED have added a layer of imagination for the industry to see future iPhones featuring the display technologies."

Apple and ams-Osram did not respond to requests for comment. TSMC and LG Display declined to comment.