Samsung Ramps up Production as It Eyes Apple OLED Supplier Spot

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Samsung Electronics aims to raise production of next-generation smartphone displays by more than 50% in 2016, as it eyes Apple’s iPhone supply chain and other manufacturers that are updating device specs, reported the Nikkei.

The South Korean manufacturer will spend about 8 trillion won ($6.82 billion) by the end of this year to scale up production capacity to the equivalent of more than 200 million smartphone panels using OLEDs at a subsidiary’s plant.

Samsung has a near-monopoly for small and mid-sized OLED panels, and Apple has approached the company for supplying such displays to upcoming version of its iPhone. The U.S. tech powerhouse previously told component suppliers that the OLED smartphone was scheduled for 2018, but a partial 2017 release has been planned.

Boosting OLED production will amount to nearly 80% of Samsung’s capital investment in its panel business, while combined investment in OLED panels and traditional LCDs has averaged nearly 5 trillion won over the past three years, reported Nikkei.

Samsung’s current OLED panel production capacity is estimated to be equivalent for 300 million smartphone screens per year.

South Korea’s LG Display also intends to invest more than 10 trillion won into expanding production of OLED TVs and other panels over the next few years. The company is also eyeing the entry into smartphone displays, while Japan Display will spend 50 billion yen (US $479 million) to build a new OLED production line in spring 2017, with mass production to begin later than 2018.

Apple’s adoption of OLED displays could encourage other smartphone manufacturers to follow up, yet Samsung’s production scale up carries risks. The capacity after the upgrade is much higher than Samsung’s own estimated smartphone sales volume of 320 million units in 2015, creating the possibility of eventually dragging down the company’s earnings.

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