As part of Apple's (NASDAQ:AAPL) surging research and development budget, the iDevice maker is surely bringing additional technologies in-house. Having experts in-house that can work closely with suppliers/manufacturers allows the company to have better control over the characteristics of the components that it ultimately asks those suppliers to build.
Perhaps the most popular example of this strategy working out for Apple is in the development of its customized A-series processors. Apple has significant chip design expertise in-house and works closely with the major chip manufacturers to develop process technologies that enable the performance and functionality that Apple's chip designers want.
It would seem that Apple is following the same playbook in display technology and, in particular, in the development of display technology based on organic light-emitting diodes, or OLEDs.
Just a ton of OLED experts popping up at Apple
I often peruse the professional networking websites for clues as to what kinds of talent Apple is hiring for and has hired. Although the following list is far from exhaustive, here are some OLED experts that the iDevice maker has hired over the last several years:
- Donghee Nam, currently a Senior Process Engineer at Apple and was formerly a Senior Researcher (and in particular, a project leader) at LG Display (NYSE:LPL) apparently responsible for the "development of OLED patterning process and device structures" for both mobile and TV OLEDs.
- James Lee, currently a Principal Technologist at Apple. Before joining Apple, Lee was a Research Fellow in LG Display's OLED Development Center, working to develop flexible OLEDs for both mobile and television applications.
- Soojin Park, currently a Process Engineer at Apple. Before moving to Apple in June 2014, he was a Principal Engineer at Samsung Display (OTC:SSNLF), leading "OLED materials and devices development for OLED TV" applications.
There are many more examples of such OLED experts from top-tier display vendors joining Apple's ranks, far more than I could possibly hope to list here.
It all makes sense
Back in January, Cowen and Company analyst Timothy Arcuri claimed (via Barron's) that Apple is working on a "proprietary OLED technology that it will ask Samsung to build/supply maybe for Fall '17."
Over the long term, it makes quite a lot of sense that Apple wants to bring in the know-how to design next-generation, proprietary (i.e. unique to Apple, not widely available to other smartphone vendors) display technologies. If Apple does a good job, it can gain a key competitive advantage by dedicating the research and development resources that other smartphone vendors simply can't match.
As Apple has grown in revenue and in research and development capability, it has become less dependent on third party suppliers for a lot of the design that goes into the components of its products.
Apple's massive research and development spending increases are actually fairly recent, so it will take some time before the fruits of that labor is visible in actual products. However, I think investors can count on Apple's future iDevices to become increasingly differentiated vis-à-vis the competition in the areas that really matter.
The company is already there with its chip designs; the display and the camera are two critical areas where Apple uses excellent components but over time -- if I'm right -- should be able to offer clear leadership over the competition. And, as long as Apple can continue to maintain/capture share in the highest profit portions of the market, it should be able to extend such leadership in the years and even decades ahead.