Apple Inc. is in negotiations with Sharp Corp. to secure organic LED displays for the iPhone maker¡¯s next generation of devices, according to a person familiar with the matter.
Any supply pact for organic light-emitting diode displays, would hinge on the Osaka-based firm¡¯s output capacity, said the person, who asked not to be identified as the talks are not public. The talks stem from Apple¡¯s desire to raise the number of OLED screen suppliers, the person said.
On Friday, Sharp announced it will invest ?57.4 billion ($566 million) in the development of OLED production facilities, with the goal of starting output by June 2018. The funds will be used for equipment in Sharp¡¯s factories in Mie and Osaka prefectures, and to deliver samples to customers, it said in a statement.
¡°Apple has unofficially or as a nod encouraged Sharp to go into it,¡± said Amir Anvarzadeh, Singapore-based head of Japanese equity sales at BGC Partners Inc. ¡°Apple¡¯s general strategy is to increase the competition on the supply side, and dilute the risk exposure to one company.¡±
Sharp spokesman Toyodo Uemura declined to comment on specific customers. An Apple spokesperson in Japan didn¡¯t immediately respond to a request for comment.
Sharp¡¯s capital investment in OLED is part of ?200 billion the manufacturer had already committed to OLED technology, part of a strategic plan it adopted with new Taiwanese owner Foxconn Technology Group. Next-generation screens based on OLED technology promise more vivid images and less battery drain. Friday¡¯s announced investment will be for smartphone displays, a Sharp representative said.
¡°This investment is in response to what Apple is doing,¡± said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. ¡°Production isn¡¯t likely to begin until the second half of 2018, so the impact to profit won¡¯t be until after that.¡±
Apple accounts for about 27 percent of Sharp¡¯s revenue, according to Bloomberg¡¯s supply chain analysis.
Earlier this year, the company agreed to accept a rescue package from Foxconn Technology Group, ending a takeover battle that spanned four years. Last month, it said its liabilities no longer exceed assets after receiving a ?289 billion infusion.
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