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What This Apple Inc. Supplier Just Revealed About iPhone 7

By Ashraf Eassa – Feb 10, 2016 at 8:45PM

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It looks as though Apple will indeed be using this next generation display technology for its upcoming iPhones.

Apple (AAPL 3.08%) is a very secretive company and very rarely provides investors with any information about its future product plans. However, many of Apple's suppliers are publicly traded companies that have to answer to their respective shareholders. As a result, the investment community can at least get hints here and there of what to expect from future Apple products.

After listening to Apple display vendor Japan Display's earnings call and going through its earnings presentation, I think that some reasonable inferences about the display technology that Apple will use for iPhone 7 can be made.

Shift to Pixel Eyes Gen. 2
Japan Display's in-cell touch display technology is marketed as "Pixel Eyes." I believe that the iPhone 6/6s families of smartphones use some variation of this technology. Interestingly, according to Japan Display, its second generation of Pixel Eyes displays will begin volume shipments in the company's fourth fiscal quarter (in other words, the current quarter).

The new displays, according to a slide accompanying the earnings presentation, should allow for narrower display borders, deeper black levels, and increased touch sensitivity.

Additionally, the company believes that by the first quarter of the company's fiscal 2016, shipments of its second generation Pixel Eyes display technology will exceed sales of its first generation Pixel Eyes displays.

Given that the first quarter of the company's fiscal 2016 should begin in March/April and end in June/July -- right around when Apple should be beginning the volume ramp up for iPhone 7 -- it seems that Japan Display is counting on Apple to adopt these next generation displays.

How about a shift to "Advanced Low Temperature Polysilicon"?
In a recent presentation on the company's technology development, Japan Display has been talking about introducing a new backplane technology that it dubs "Advanced Low Temperature Polysilicon" or "Advanced LTPS."

In a nice explanation from Android Authority, the backplane of a display "contains an array of transistors which are responsible for turning the individual pixels on and off" and ultimately impacts display resolution, refresh rate, and -- quite importantly for mobile applications -- power consumption.

Indeed, in its technology presentation, Japan Display was keen to talk up the power consumption benefits of "Advanced LTPS" relative to standard LTPS.

Shifting back to the earnings presentation, Japan Display indicated that adoption of Advanced LTPS displays will begin early in fiscal year 2016 and ramp strongly into fiscal year 2017. This leads me to believe that there is a reasonable chance that we see this technology in the next iPhone.

With the power reductions enabled by this Advanced LTPS, Apple may be able to offer increased display resolutions on both the iPhone 7 and the iPhone 7 Plus without seeing a negative impact on battery life.

Looking beyond iPhone 7
Japan Display made it clear that it is boosting its research and development efforts around OLED-based displays, which Apple is expected to adopt in the 2018 timeframe. Perhaps not-so-coincidentally, Japan Display executives say that the company is increasing its resources in order to hit its claim of mass production start on OLED displays in 2018.

If that's not a solid indicator that the iDevice maker plans to adopt OLEDs in the iPhone 8/8 Plus, then I don't know what is!


Ashraf Eassa has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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