Apple’s plans to integrate Mini LED displays into its various product lines continue to see disruptions from an unstable supply chain, with TF Securities analyst Ming-Chi Kuo predicting iPad Pro to be the first to benefit from the technology.
In a note to investors on Wednesday, Kuo said he believes iPad Pro will be the first Apple device to sport a Mini LED display. It was previously speculated that the distinction would go to a revamped MacBook Pro or iMac.
Suppliers are readying dies for production in the fourth quarter of 2020, the analyst said, though recent supply chain checks show revised down shipment volume estimates at between 300,000 and 400,000 units. Down 50% from prior forecasts, the decreased output is said to be a result of issues relating to the production of display module materials.
With constrained resources as a backdrop, Apple appears to be leveraging its massive market weight to diversify its nascent Mini LED supply chain. Epistar remains a primary partner, and the company has developed a proprietary production optimization system while working with the tech giant, Kuo said.
“Apple is the global consumer electronics brand with the highest bargaining power over suppliers,” Kuo writes. “In order to find new suppliers, and reduce supply risks and costs, we believe that Apple leads the design of most parts and owns related patents. Mini LED dies are no exception.”
Epistar’s patented process is viewed by some as a barrier to entry for potential secondary suppliers like Sanan Optoelectronics, Osram, and Seoul Semiconductor, but Kuo disagrees. In a previous investor note, the analyst said Sanan could enter Apple’s supply chain as soon as the first half of 2021.
With Sanan in the mix, Apple’s Mini LED die cost is expected to drop by about 50% year-over-year in 2021, and 35% year-over-year in 2022, according to today’s note.
Kuo further expects a “fierce price war” between Apple and non-Apple Mini LED chip makers to kick off as the first products roll of the line this year.
“We believe that China’s industrial chain (including downstream displays and upstream LED chips) will start a price war and gain a leading position in the mini LED market,” Kuo writes. “The price war advantage will come from lower production costs, economies of scale and government subsidies.”
A relatively new backlighting technology, Mini LED dies position thousands of LEDs behind an LCD screen to offer better local dimming, color reproduction and contrast ratios than conventional LED-backlit displays. Apple is forecast to rely on the technology for at least five years before moving on to more exotic solutions like micro LEDs.