Apple's competitors have adopted a wait-and-see approach, pushing back smartphone chip orders as they're waiting to see the OLED-based iPhone 8 before making future plans.
Apple has purchased sophisticated equipment to set up its own research and development facility in Taiwan to develop its own OLED technology in order to reduce its dependence on Samsung Electronics for iPhone OLED panels.
According to a repot Monday from Taiwanese trade publication DigiTimes, the Cupertino giant has purchased chemical vapor deposition (CVD) machines from Korea-based Sunic System to build a 2.5G OLED panel line.
In-house OLEDs will allow Apple to differentiate its products from other handsets that use Samsung-built OLED panels. According to a Chinese-language Commercial Times report cited by DigiTimes, the move will break the dominance of Japan-based Canon Kokki, currently the primary supplier of CVD machines that ships the bulk of its output to Samsung.
“Samsung has bought five sets of OLED manufacturing equipment from Canon Tokki so far in 2017 and has signed contracts to buy five out of ten such machines to be rolled out by the Japan-based machinery company in 2018,” said the Commercial Times.
LG Display also purchased these machines but Apple has yet to validate its OLED panels.
iPhone 8 mockup via iDropNews.
Samsung Electronics has not been building Apple-designed mobile chips for iPhone and iPad for almost four years now, but the South Korean conglomerate is rumored to be sharing Apple orders with rival Taiwan Semiconductor Manufacturing Company (TSMC) from next year.
According to a report Tuesday in The Korea Herald, Samsung has invested in a new manufacturing facility for churning out chips fabricated on the more energy efficient seven-nanometer process technology solely for iPhone.
“Samsung plans to complete its own tests for the new chip-making machines soon and seek final approval from Apple for the chip production,” reads the report.
The company reportedly purchased extreme ultra violet lithography machines, the most advanced chip manufacturing equipment in the world, to use in iPhone chip production from 2018. Kwon Oh-hyun, one of Samsung’s three co-CEOs, apparently played a key role in securing the deal during his visit to Apple’s headquarters last month.
“The CEO could persuade Apple’s top brass taking advantage of their close ties on OLED,” said an industry source. Samsung, as you know, is also the sole supplier of OLED panels for the upcoming OLED-based iPhone model.
Rival TSMC also won a supply deal for next year’s iPhone and the reports said Samsung would share some parts of iPhone chip orders next year with TSMC.
Apple has puzzled industry watchers by investing tens of millions of dollars in production equipment for iPhone 8's rigid flexible printed circuit board, which connects chips with parts such as the display, camera and so forth, ET News reported Friday.
The company will use this component for iPhone 8's touch screen panel.
The reason the move has raised questions is because Apple lacks its own production plant to install the equipment and the fact that it contracted three different suppliers to build this crucial iPhone 8 component, including Interflex and Youngpoong Electronics.
According to a source, one of the three suppliers recently decided to back out for reasons unknown, prompting Apple to take matters into its own hands. The Cupertino technology giant is now leasing the equipment it bought to suppliers to ensure it gets the parts it needs.
Additionally, the company is seeking to find a new supplier in Taiwan.
Sources speculate the supplier likely backed out due to low profitability and Apple's exacting standards when it comes to production quality. The iPhone maker is expected to order a hundred million units of the rigid flexible printed circuit board for iPhone 8.
“To fill the loss, Apple is supporting the other two suppliers to beef up production,” said the source. Rigid flexible printed circuit boards are much more difficult to build than the conventional ones.
iPhone 8 mockup via iDropNews
The Economic Times of India reported today that although Apple is in no hurry to assemble additional models in India beyond iPhone SE, it is allegedly planning to eventually expand production capacity and bring “Made in India” devices to overseas markets.
“Apple will focus on iPhone SE model both for India and overseas markets,” a government official said. “It is looking to start exports from India,” the person added.
Apple's manufacturer Wistron has been assembling a limited run of “Made in India” iPhone SE models for two months now in a facility set up at Peenya on the outskirts of Bengaluru.
Those phones currently don't ship overseas and don't carry a lower price tag even though they're made locally. Government officials aware of the matter say Wistron has not made any fresh request for approval.
“Apple will stick to making iPhone SE model at its Bengaluru plant for some more time and has no immediate plan to assemble its flagships iPhone 7 and iPhone 7 Plus in the country, according to the government source quoted earlier.
Just yesterday, the same publication reported of Apple's alleged plans to expand local production. According to that article, Apple could manufacture other iPhone models in India at a later stage and even set up a full-fledged manufacturing plant.
Apple is also planning to open its largest global store to date in India by 2020.
It's reportedly looking at 4-5 flagship outlets limited to metros over 5-10 years. The stores will be located at prime locations and should have enough class to make them tourist attractions.
Lastly, the Cupertino giant could launch a dedicated online store in India by October.
A major malfunction at one of its manufacturing facilities in Taiwan has caused DRAM chip provider Micron Technology to scrap half of the wafers produced at the plant, trade publication DigiTimes said Thursday. About 60,000 units of twelve-inch wafers have been scrapped.
The problems with nitrogen gas have caused production lines at the fab to stop temporarily, said a report from Taiwan's TechNews, without citing its source.
Research firm TrendForce said that a nitrogen gas dispensing system malfunction had led to the contamination of wafers and equipment in Micron's plant near central Taiwan.
The facility in question is known to have produced LPDDR4 RAM for iPhone devices in the past.
”The temporary shutdown of Fab-2 could have an impact on shipments of the upcoming new iPhone devices as well,” added the research firm.
TrendForce analysts base their reports on channel checks in the supply chain.
“Regarding recent rumors about Micron's fabrication facility in Taoyuan, Taiwan, Micron hereby clarifies that there was no nitrogen leaking incident nor evacuating of personnel,” Micron said in a statement to Reuters.
“There was indeed a minor facility event but operations are recovering speedily without material impact to the business.”
According to DRAMeXchange in June, the average selling price of these chips will rise five percent sequentially in the third quarter of this year as supply remains tight. The rise in DRAM prices could also be seasonal due to the expected ramp up in iPhone production during the summer ahead of new models coming in the fall.
DRAMeXchange is a division of TrendForce.
It's unclear if the incident at the Micron plant will impact Apple's launch volume targets for the OLED-based iPhone 8 and the iterative LCD-based iPhone 7s and iPhone 7s Plus smartphones.
The Cupertino company typically diversifies its suppliers in order to minimize risk.
For what it's worth, Apple has also experienced a shortage of 3D NAND flash chips for 2017 iPhones due to lower-than-expected yield rates for SK Hynix and Toshiba's 3D NAND technologies, forcing the Cupertino giant to turn to Samsung as a supplier.
iPhone 7 X-ray image courtesy of iFixit
Apple's upcoming iPhone models—the OLED-based iPhone 8 and the iterative LCD-based iPhone 7s and iPhone 7s Plus handsets—have been hit in a global shortage of 3D NAND flash chips, forcing the Cupertino giant to call on Samsung in an effort to secure more.
According to a new report Thursday from DigiTimes, the overall supply of 3D NAND flash components for 2017 iPhones has fallen short of Apple's orders by as much as thirty percent.
That's because the company's current flash chip suppliers SK Hynix and Toshiba have both experienced lower-than-expected yield rates for their 3D NAND technologies.
SK Hynix is among the bidders for Toshiba’s lucrative flash chip unit.
Here's an excerpt from the DigiTimes report:
Apple has turned to Samsung for more NAND chip supplies for its upcoming phones, since Samsung has relatively stable yield rates for 3D NAND technology and has scaled up its output of 3D NAND chips.
TrendForce estimated that supplies of the 3D NAND flash storage chip won't ease until the middle of 2018. “The NAND Flash industry’s manufacturers will continue to devote their attention to the development of 3D 64L NAND Flash technology in 2017,” said TrendForce.
In the second half of 2018, some suppliers will also begin to shift their attention towards the industry’s newer and more advanced 96L flash storage products. Samsung, Toshiba and Micron Technology are currently transitioning to 64-layer 3D NAND flash products, while SK Hynix plans to jump straight to supplying 72-layer 3D chips.
“These gradual changes are all expected to have a potentially beneficial effect on the productions of NAND Flash in 2018,” added TrendForce. “As a result, their prices could start to fall as early as next year”. However, the global supply of NAND flash chips is set to remain tight through the end of 2017.
Business Korea said that Samsung Electronics (which leads the global NAND flash market), Toshiba, Western Digital and SK Hynix are accelerating the development of these three-dimensional NAND flash chip technologies, which basically stack more memory cells than 2D chips while utilizing existing mass production facilities.
The 128GB iPhone 7 model, for example, uses Toshiba’s 3D BiCS NAND technology, which stores three bits of data per transistor and stacks 48 NAND layers onto a single die, bringing accelerated read and write performance compared to 2D flash memory chips.
Orders for Microsoft's Surface devices, including the latest models, have been much smaller than the original expectations of Pegatron, the contract manufacturer which assembles them.
According to sources from the upstream supply chain cited in a DigiTimes report Tuesday, Pegatron Technology has seen weakening orders from clients recently.
Here's an excerpt from the report:
Since demand for Microsoft's Surface products has been seriously undermined by other first-tier vendors' similar devices, the software giant has been conservative about placing its orders, which have been much lower than than Pegatron's original expectations.
Pegatron also assembles iPhones alongside Apple's longtime manufacturer Foxconn.
The Windows giant unveiled a fifth-generation Surface Pro tablet on March 27 alongside a new Modern Keyboard with a built-in fingerprint reader and other accessories. Among other features, the device has 13.5 hours of battery life, Intel’s seventh-generation Core processor code-named “Kaby Lake”, a new Alcantara keyboard, a next-generation Surface Pen and more.
The same Intel chip also powers, Microsoft’s $999 MacBook rival, dubbed Surface Laptop.
https://www.youtube.com/watch?v=tlZJw-zk0bU
Speaking of which, DigiTimes says that Surface Laptop orders are unlikely to boost Pegatron's revenues until later in the third quarter of 2017. Pegatron Vice Chairman Jason Cheng expects revenues in the second half of 2017 to at least stay flat year on year.
Microsoft is reportedly set to lay off thousands of sales staff around the world in the latest round of restructuring, TechCrunch said a few days ago. Bloomberg added that the redundancies would be “some of the most significant in the sales force in years.”
Apple is reportedly in talks with LG Display about investing anywhere between $1.75 billion and $2.62 billion into the South Korean firm's new “E6” plant with a target monthly capacity of about 30,000 units of sixth-generation OLED panels.
According to The Korea Herald newspaper on Monday, the upcoming facility would be “exclusively dedicated to Apple orders” and should come online as early as 2019. A source said that the funding from Apple should help LG Display reduce risks from the lower margin.
The two companies have tentatively agreed on the investment plans, but details on the timing and size of the investment have yet to be finalized. The final decision is expected to be made following LG Display's board meeting later this month.
LG previously discussed an $870 million Google investment into its OLED plant.
An anonymous source said:
Samsung Display is the only display maker that meets Apple’s strict quality criteria for now. LG Display is said to be meeting about 70 percent level of the requirements, while Chinese display makers are still struggling to catch up with that of LG.
LG Display’s OLED supply for iPhone was delayed because the company failed to purchase Canon Tokki’s vacuum machine, the most advanced OLED production equipment whose supply is extremely limited. Recently, LG secured two units of the machine to speed up production.
With the new equipment installations expected in December 2017 and February 2018, LG Display’s production capacity is expected to double to 60,000 OLED panel units per month.
LG’s other new OLED plant, called “E5”, will focus on orders from LG Electronics and Chinese clients. Samsung Display is expected to be the sole supplier of OLED panels for iPhone 8 this year. LG Display currently builds flexible OLED panels for Apple Watch on an exclusive basis.
Samsung Display is reportedly building the world's biggest OLED manufacturing facility dedicated to orders from Apple and Samsung Electronics.
iPhone 8 concept via Benjamin Geskin.
Samsung is planning to build the world's biggest OLED display manufacturing plant that could kick off volume production in 2019, with a peak yield of between 180,000 and 270,000 OLED display panels per month, according to industry sources.
By comparison, the company's existing “A2” factory currently produces 180,000 units of rigid and flexible OLEDs per month.
Samsung Display, the South Korean conglomerate's display-making arm, will invest more than $1.75 billion just to construct the new plant. The report is relevant to our readers because Samsung Display is believed to be an exclusive provider of OLED panels for iPhone 8.
When operational, the company's new OLED factory, tentatively named “A5”, should have 30 percent higher production capacity than Samsung current biggest factory called “A3”, according to Korean outlet ETNews.
The site added that Samsung began expanding capacity of its upcoming “A3” factory during the second half of 2015 in order to meet Apple's order for a large amount of OLED panels.
According to the report, Samsung Display has secured production capacity of 135,000 OLED panels per month over the next two years, primarily to serve the needs of its two biggest clients: Apple and Samsung Electronics.
iPhone 8 Full Vision Display concept courtesy of iFanr.
iPhone 8 production has allegedly hit another roadblock, with a sketchy report Tuesday by Taiwanese outlet DigiTimes suggesting the supposedly limited availability of 5.8-inch OLED display panels could hold back the phone's launch sales.
Citing industry sources, the trade publication says it'll be difficult for Apple to ship up to 60 million OLED-based iPhones in 2017.
“Only 3-4 million OLED-based new iPhone devices will be ready for shipping before the new smartphones are unveiled at a product event slated for September,” reads the article.
The publication did not give the reason for the allegedly limited OLED screen availability beyond stating that yield rates at assembly plants and the supply of OLED panels are “likely to become issues” for the Cupertino firm.
Take the report with a few grains of salt because Samsung Display recently negotiated a lucrative supply deal with Apple to build at least 80 million OLED panels for iPhone 8 in 2017.
In fact, the South Korean conglomerate is said to be supplying OLED screens for both iPhone 9 in 2018 and a yet-to-be-disclosed Apple device with a screen measuring 6.5 inches diagonally, as per The Korea Herald.
Besides, iPhone assemblers Foxconn, Pegatron and Wistron have been stepping up efforts to recruit more workers for their assembly lines in China, indicating that volume production of iPhone 8 is about to kick off.
On top of that, Apple's key chip supplier Taiwan Semiconductor Manufacturing Company saw its revenues surge twenty percent sequentially in May, partly driven by shipments of iPhone 8's A11 processors to Apple.
iPhone 8 mockup top of post via Benjamin Geskin
Apple has started manufacturing its Siri speaker ahead of the WWDC keynote next week.
Bloomberg's Mark Gurman has learned from people familiar with the matter that the new smart home appliance won't be ready to ship until later in the year. However, Apple could debut the gadget during next Monday's keynote presentation at WWDC.
People who have seen it told Bloomberg that the product won't have a touchscreen, unlike what KGI Securities analyst Ming-Chi Kuo speculated.
Taipei-based AirPods manufacturer Inventec has been tapped as the sole manufacturer of the Siri speaker. Bloomberg previously reported that Apple employees have been secretly testing the device in their homes for several months.
The forthcoming Siri gadget reached an advanced prototype stage late last year.
Apple is reportedly seeking to differentiate the Siri speaker from Amazon Echo and Google Home by offering virtual surround sound technology, Apple Music and other integrations.
The Siri speaker would also act as a HomeKit hub to let users remotely control smart home appliances such as lights, door locks and window blinds, a feature that currently requires either a fourth-generation Apple TV or an iPad.
Here's an excerpt form the article:
Along with generating virtual surround sound, the speakers being tested are louder and reproduce sound more crisply than rival offerings, sources in the know said.
Apple has also considered including sensors that measure a room’s acoustics and automatically adjust audio levels during use, one of the people said.
“This will be a platform for developing Apple’s services,” says Gene Munster of Loup Ventures.
Gurman speculated the Siri device could be tucked into Apple’s $11 billion “Other Products” category along with other devices like Apple Watch, Apple TV, AirPods and Beats accessories.
Apple declined to comment.
Siri speaker mockup via iFunnyVlogger on Twitter.