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EghtesadOnline: Apple Inc. is in discussions with China’s BOE Technology Group Co. to supply next-generation displays for future iPhones, a key component that’s being provided by a Samsung Electronics Co. unit, people familiar with the matter said.

Apple’s been testing BOE’s active-matrix organic light-emitting diode screens for months but hasn’t decided if it’ll add the Chinese company to its roster of suppliers, one of the people said, asking not to be named talking about private negotiations. BOE, one of the country’s largest screen makers, is spending close to 100 billion yuan ($14.5 billion) building two AMOLED plants in the southwestern province of Sichuan in anticipation of future business. Talks are at an early stage and it’s unlikely to supply the next iPhone, but BOE is banking on outfitting the one in 2018 or later, the person said.

If BOE is selected for OLED, it will become the first known future supplier of the next-generation screens to Apple outside of South Korea and Japan -- a triumph for a Beijing-based company best known for computer and TV displays. The U.S. company is exploring alternatives to address a global shortage of OLED displays as it prepares to adopt the sharper, more power-efficient technology for its next iPhones, catching up with rivals such as Samsung and Huawei Technologies Co, according to Bloomberg.

Apple declined to comment, and BOE declined to comment on talks with customers.

The display is one of the most expensive components of a smartphone. OLED screens are more difficult to produce, making Apple beholden to suppliers still working to manufacture the displays in mass quantities. The world’s four biggest suppliers of smartphone displays -- Samsung Display Co., Sharp Corp., LG Display Co. and Japan Display Inc. -- are said to have insufficient capacity to equip all new iPhones this year, a constraint that may persist into 2018. That means Apple may be forced to adopt OLED in just a single version of its device this year, the 10th anniversary of the smartphone’s debut.

“It’s an opportunity for BOE as Apple is known to seek multiple suppliers for one component,” said James Yan, research director for Counterpoint Research in Beijing. “But it’s unlikely to challenge Samsung because it is able to roll out high-quality screens at a steady capacity.”

BOE’s shares had climbed 1.3 percent in Shenzhen by midday, outperforming a mostly unchanged benchmark A-share index.

Founded in 1993 after employees took over an ailing producer of electron tubes, Beijing-based BOE is the world’s largest manufacturer of LCD panels by market value, according to data compiled by Bloomberg. BOE, which started out as Beijing Orient and enjoyed the support of a government keen to champion local technology players, is now building a 46.5 billion-yuan flexible AMOLED plant in Chengdu. 

While it’s ramping up capacity, it’s likely to miss the next iPhone. That sixth-generation factory won’t crank out a single screen till the summer, while new iPhones typically go on sale in the fall. When that plant is up to full capacity, it’ll be able to put out 48,000 glass substrates a month, BOE said in an e-mailed statement, referring to the thin surfaces from which screens are carved out.

Another plant in Mianyang with the same capacity and investment is expected to start production only about two years later. The company currently operates only a small OLED factory in remote Inner Mongolia. Eventually, when its two plants are up and running, it expects to be able to manufacture 1.6 million square-meters of flexible AMOLED glass substrates a year, slightly more than researcher IHS’ estimate for total global production in 2016.

Apple typically introduces new technologies for its iPhones across all models when they’re unveiled, usually in September, as it did with 3D Touch and Apple Pay. Using different core, user-facing technology in the same iPhone generation would be an unusual step. All iPhone 7 models have liquid-crystal display screens. 

The U.S. company and Samsung have an exclusive OLED supply deal covering 2017, people with knowledge of the agreement have said. Yet that doesn’t guarantee the South Korean technology giant can make enough displays to sate iPhone demand, particularly given Samsung needs to outfit its own slate of upcoming gadgets. Some analysts estimate that Apple could sell as many as 90 million iPhones in the last three months of 2017 alone.

Apple iPhone iPhone Screens Apple Suppliers BOE Technology Group