There has been a lot of speculation in the press that Apple (NASDAQ:AAPL) will transition from traditional liquid crystal displays, or LCDs, to organic light-emitting diodes in a future iPhone. Some reports have pegged this transition for late 2017 (that is, late 2017 product introduction; display panel production would need to happen well in advance), while others are looking for a late 2018 introduction.
Although, for Apple's sake, it would be better for the company to transition to OLEDs in 2017 than hold off until 2018 if possible for competitive reasons, I could very much see it waiting until 2018.
At any rate, whether it's 2017 or 2018, it's looking like this transition to OLED is going to happen by 2018. Here's why.
Japan Display says it'll be good to go in 2018
Per a report from Reuters, Japan Display said that it will begin mass production of OLED displays by 2018. Japan Display is said to be the main supplier of the LCDs used in the current iPhone 6s/6s Plus and is expected to once again be the main provider of LCDs for the upcoming iPhone 7/7 Plus, per DigiTimes.
Given that 2018 is when Apple is expected to launch the iPhone 8, which should represent a significant redesign compared to the iPhone 7/7s, Japan Display would be able to capture a reasonable portion of Apple's iPhone 8/8 Plus display orders if it delivers.
2017 or 2018? That's the question
If Apple insists on having Japan Display in the supply chain loop for OLEDs (for example, Apple wanting a minimum of three suppliers to ensure it can get proper supply for this relatively new technology), then Apple customers and shareholders alike will have to wait until 2018.
By then, Japan Display, Samsung (NASDAQOTH: SSNLF) Display, and LG Display (NYSE:LPL) should all be ready to go to pump out OLED-based displays for the iDevice maker.
However, I still could see Apple moving to OLEDs in 2017 with the introduction of the iPhone 7s simply in order to remain competitive.
This scenario would mean that longtime iPhone display vendor Japan Display would be "out of the loop" for the iPhone 7s (although it could still benefit from sales of displays into older-generation iPhones), but the Japan-based display maker could see a rebound in the following year.
I've written about how I believe that not transitioning to a new/better display may have hurt the competitiveness and ultimately customer interest in the just-released iPhone 6s/6s Plus phones.
Indeed, the move to OLEDs -- which offer a number of very noticeable advantages over LCDs -- would be noticeable to most consumers, potentially making it an interesting selling point all by itself. However, combined with the other innovations that Apple will surely bring to the 7s, Apple could be poised to see quite a nice upgrade cycle even if the iPhone 7 cycle turns out to be a robust one.
I continue to believe the timing of Apple's OLED transition will come down to both technology and available industry capacity. If the technology is mature enough and the capacity is there, I could see Apple breaking with its tradition of recycling displays in its "s" phones from its prior-generation "new number" phones and bringing in OLEDs with the iPhone 7s in late 2017.