DIGITIMES is out with a new report in which it says that Apple (NASDAQ:AAPL) is on track to purchase between 250 million and 270 million screens for the production of iPhones throughout the course of 2018.
The report claims that the company is set to purchase between 110 million and 130 million organic light-emitting diode (OLED) displays. These screens will be used in the current iPhone X, its successor, and a larger version of that successor.
Apple is also reportedly planning to purchase between 60 million and 70 million 6.1-inch liquid crystal displays (LCDs) for use on the upcoming lower-cost iPhone, as well as between 60 million and 70 million LCDs for use on the iPhone 8 series, iPhone 7 series, and iPhone SE smartphones.
Supplying the OLED panels will primarily be Samsung, the report claims, although LG Display "will strive to become the second supplier in the second half of 2018, aiming to secure orders for the new 6.5-inch OLED model to be launched this fall."
The LCD panel orders, DIGITIMES says, will be split among three players: Japan Display, Sharp, and LG Display.
Let's go over two of the more interesting implications of this report.
Apple's big expectations for 6.5-inch OLED model
At first blush, it might seem as though Apple expects the successor to today's iPhone X to significantly outsell the upcoming 6.5-inch OLED iPhone -- or, as I'll call it, the iPhone X Plus -- in the coming product cycle. Apple is reportedly ordering between 70 million and 80 million 5.9-inch OLED panels suitable for such a device while only buying between 40 million and 50 million 6.5-inch OLED panels for the larger model.
The key, though, is to realize that these numbers are for the entirety of 2018, which means that a large chunk of those 70 million to 80 million 5.9-inch OLED panel orders in 2018 will be for the iPhone X that's currently available for sale.
According to Nikkei Asian Review, Apple is expected to build roughly 20 million of the current iPhone X model in the first calendar quarter of 2018. If we assume that Apple builds another 15 million of the current iPhone X models in total during the second and third quarters of 2018, then of the 70 million to 80 million 5.9-inch OLED screens that Apple buys this year, only 35 million to 45 million will be for the model expected to launch later this year.
Put another way, Apple seems to be expecting to build slightly more units of the iPhone X Plus than of the next-generation iPhone X, which could mean that Apple expects to sell more of the former than of the latter.
Apple expecting iPhone X series to outsell LCD models?
Previously, generally reliable analyst Ming-Chi Kuo with KGI Securities predicted that the cheaper LCD iPhone that Apple intends to introduce later this year will make up roughly 50% of the shipments of newly released iPhones. If DIGITIMES' reporting is accurate (something that, admittedly, we shouldn't take for granted), then Apple's view seemingly conflicts with Kuo's.
Based on the numbers DIGITIMES is putting out there, Apple seemingly expects the higher-end OLED based iPhone models to, in aggregate, outsell the upcoming LCD model. Such a scenario would be a positive for Apple, as the OLED-based models will be priced higher, which would mean greater revenue and ultimately profit for Apple (assuming similar gross profit margin percentages on all the new iPhone models).
Keep in mind, though, that this is merely one report from a single publication, so don't take these reported numbers as hard fact. Even if the reporting is completely accurate, the reality is that plans can change, especially once Apple actually launches the products and gets a better sense of what the demand is like for them.
Ashraf Eassa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.