Much to the chagrin of Universal Display Corporation (NASDAQ:OLED) bears, speculation surrounding whether Apple (NASDAQ:AAPL) will finally launch an OLED iPhone only continues to gain steam. In fact, despite my own urging for Universal Display investors to focus first on nearer-term (i.e., "non-Apple") catalysts driving the OLED specialist's results -- and with the caveat that I'm not complaining about the positive sentiment -- at this point an OLED iPhone from Apple looks more inevitable with each passing day.
"Only a matter of time"
If it wasn't enough in November to hear Universal Display CFO Sid Rosenblatt assert that an OLED iPhone is "only a matter of time," a new report surfaced from Business Korea two weeks ago citing unnamed "display industry sources" as saying Apple will purchase OLED display panels in 2018 from Samsung (NASDAQOTH: SSNLF) Display "or" LG Display (NYSE:LPL) for use in its iPhone 8. Keeping in mind Samsung Display and LG Display are Universal Display's two largest customers, that also made sense given large-scale investments in new OLED production lines already announced by both companies, as well as the fact Apple already introduced OLED displays into its product line, beginning with the Apple Watch last year.
Much in the same way it does for current LCD iPhone displays, investors should also know it's not uncommon for Apple to use multiple display vendors to supplement demand. To be sure, while LG Display was initially the sole provider for OLED displays in the Apple Watch, Apple was rumored to have diversified its sources by adding Samsung as a secondary OLED supplier this past October.
It's not just South Korean OLED suppliers entering the mix. Last week, Focus Taiwan reported Apple wants to invest in AU Optronics (OTC:AUO) -- another Universal Display customer, by the way -- in an effort to "transform" it into a third reliable source of OLED displays for future iPhones. And that's not to mention previous supply chain rumblings that Apple has commissioned longtime supplier Foxconn (NASDAQOTH: FXCNY) and Innolux to build a $2.6 billion factory targeting 2017 production of OLED screens for both wearables and smartphones.
A curved OLED iPhone?
On Tuesday, however, South Korea-based ET News threw the latest curve ball into the mix, reporting LG Display has solidified plans to achieve production capacity at its first gen-6 manufacturing facility of 75,000 substrates per month by the first half of 2017. For comparison, each substrate at existing gen-6 LCD plants generates roughly between 324 and 333 5.5-inch displays. Assuming similar yields, that means LG Display's gen-6 plant would be capable of producing a maximum of more than 290 million iPhone-sized OLED displays per year.
The kicker? ET News says this new capacity will be aimed at curved OLED display production. So if this is indeed capacity meant to meet Apple's lofty demands, it could mean Apple is planning a massive transition to a curved, foldable, or even bendable form factor for its iPhone 8 in 2018.
Combined with the superior contrast, colors, and brightness OLED technology brings to the table -- and as soon as the manufacturing capacity is there for Apple to implement it on the required scale -- this technological shift could potentially prove to be Apple's most drastic design change since introducing the original touch screen-only iPhone in 2007. When that happens, I think investors in both Apple and Universal Display will be rewarded handsomely for their patience.