It looks like LG Display (NYSE:LPL) is going to be a key supplier of components for at least some of Apple's (NASDAQ:AAPL) upcoming iPhones.

LG Display, which generated roughly 22% of its revenue last quarter from selling mobile displays , is set to provide Apple with 20 million liquid crystal displays (LCD) and between 3 million and 4 million organic light-emitting diode (OLED) displays, according to DigiTimes and Newspim.

Apple's iPhone 8 Plus (left) and iPhone 8 (right).

Image source: Apple.

The LCDs should be for Apple's upcoming mainstream iPhone with a 6.1-inch display, which is expected to be the most popular of Apple's upcoming iPhones, while the OLED displays are said to be for Apple's highest-end iPhone with a 6.5-inch display. Moreover, LG Display is reportedly "likely to secure the majority of 6.5-inch OLED panel orders from Apple in 2019."

LG Display has long supplied Apple with LCDs for several of its product lines, including the iPhone, iPad, as well as even the Mac, so the news that it'll be a key vendor of iPhone LCDs this time around isn't surprising. However, if this report is accurate, this will be the first time that LG Display will supply more advanced OLED displays to the Mac Maker.

Let's go over what this means for both LG Display and for Apple.

A nice win for LG Display

LG Display has lagged behind rival display maker Samsung (NASDAQOTH:SSNLF) in the production of OLED displays for smartphones. Indeed, there's a good reason why Apple, a company that has a penchant for pitting suppliers against each other to get better pricing, relied exclusively on Samsung Display for the screens on the current iPhone X: Nobody else could deliver.

Apple generally has high standards for the displays that it ships on its iPhones, so the fact that the Mac Maker thinks that LG Display's technology is good enough to use in what will soon be its highest-end iPhone, seems like an important -- and positive -- development for LG Display's mobile OLED screen efforts.

Apple is expected to launch its trio of new iPhones in September. Since all three devices are likely to go on sale at the same time, and since Apple typically begins building iPhones well in advance of the official launch, LG Display should be shipping displays -- both LCD and OLED -- in support of these new iPhones as we speak.

There are short-term and longer-term implications to LG Display winning Apple OLED business this year. In the short-term, LG goes from having zero OLED share at Apple to a modest amount of share. Longer-term, LG Display should have an opportunity to grow its OLED share within Apple (since it's likely that Apple doesn't want to be overly dependent on Samsung, which is a major rival of Apple's in the premium smartphone market).

In addition to the opportunities within Apple, LG Display should gain both credibility and valuable experience from supplying OLED screens to a demanding customer like Apple. The display specialist could leverage its potential success at Apple to become a key supplier of OLED screens for other smartphone makers looking to compete with Apple.

Considering that premium smartphones seem to be moving away from LCDs and toward OLEDs, LG Display's opportunities to supply OLED displays to other smartphone makers in the coming years could be set to grow.

Good news for Apple, too

Although LG Display is set to benefit from winning Apple OLED screen orders, there's another winner here: Apple.

Reports have circulated that Apple is paying Samsung a tidy sum for each OLED screen used in its iPhone X line. IHS Markit estimated that the iPhone X's display runs Apple $110, and supply chain guru Ming-Chi Kuo with TF Securities echoed that estimate, saying that the iPhone X screen costs Apple $120.

By contrast, IHS pegs the cost of the LCD on the iPhone 8 Plus at $52 -- less than half of what it estimates the iPhone X's display costs.

Part of the premium that Apple has to pay for the OLED screen on the iPhone X is likely due to the inherent difficulty in manufacturing it compared to the LCD screens found on the iPhone 8 and iPhone 8 Plus. But I'd be quite surprised if some of that premium weren't also due to the fact that Apple only had one supplier for those OLED screens, too.

After all, if Apple wanted to ship the iPhone X when it did, it needed to either pay what Samsung wanted for the screens or not ship the device. Considering how critical the iPhone is to Apple's business performance and how successful the iPhone X has been in bumping up Apple's iPhone average selling prices, paying up for those screens was clearly the right move. 

The good news for Apple is that with two viable suppliers in the game, it may be able to compel its suppliers to accept lower prices the displays that it buys in the product cycles ahead, beginning with the coming one.

That lower screen pricing can give Apple additional flexibility to do things that could improve its revenue and/or profitability. For example, Apple could use the lower display pricing to lower product prices in a bid to increase iPhone volume shipments. Alternatively, Apple could keep iPhone product pricing the same and either improve its profitability per device or use the cost savings on the display to add other features and capabilities to its devices without blowing up its bill of materials budget.

The point is, more competition means lower component prices for Apple, which can ultimately be used to improve its business.

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.