Apple anticipates fans would lean toward the cheaper LCD iPhone this year

A mockup of 2018 iPhone models

Apple reportedly expects to sell more iPhones in its coming 2018 lineup that will be outfitted with cheaper LCD screens than the models equipped with pricey OLEDs.

Apple expects LCD iPhones to make up the majority of sales in the fall 2018 lineup. As a result, the company’s ability to increase average iPhone selling prices next year may be limited.

LCD iPhone

Apple is expected to release three new iPhones this year: a cheaper 6.1-inch device with an LCD screen alongside a pair of OLED-based models, one a second-generation 5.8-inch iPhone X and the other so-called iPhone X Plus outfitted with a 6.5-inch display.

The Wall Street Journal reported Friday that the Cupertino firm had scaled back expectations for sales of this year’s flagship iPhone models and adjusted production plans accordingly.

The production planning suggests the transition to a newer type of screen called organic light-emitting diode, or OLED, is likely to be slower than many in the industry believed a year ago, when the iPhone maker was preparing its first OLED smartphone. Analysts say demand was weaker than their initial forecasts for that phone, iPhone X, due mainly to its price tag, which starts at $999.

The notion of an overpriced iPhone X affecting Apple’s production planning clashes with Apple’s surprisingly strong March quarter numbers and the fact that iPhone X outsold other iPhone models in the latest quarter.

In fact, Tim Cook said that iPhone X was the best-selling model every week in the quarter.

LCDs aren’t going away yet

On the other hand, average consumers are sensitive to the price of smartphones so Apple would certainly be wise to widen the addressable market for this year’s iPhones by covering multiple price points, which they seem to be doing by bringing a cheaper LCD model to the mix.

In fact, the company reportedly plans to use the LCD displays in one of next year’s iPhone model as well, suggesting it’s fairly safe to expect them to continue diversifying the lineup with multiple models covering a wider range of price points.

“People involved in the supply chain said they expected Apple to include at least one LCD model in its 2019 plans rather than shifting to an OLED-only lineup because they said Apple wanted consumers to have a more affordable option,” reads the story.

2018 iPhone lineup by KGI Securities analyst Ming-Chi Kuo

A key reason for the iPhone X’s relatively high price is its Samsung-made OLED screen which costs nearly three times more at $100 per unit than the more ubiquitous LCD panels in iPhones, that cost Apple an estimated $40 per unit.

Yield issues

Samsung Display, as you know, is currently the sole supplier of iPhone X’s OLEDs. But because Samsung’s production yield has yet to surpass the more widely available LCDs, OLED-based iPhones will continue to be pricey for the time being.

The article mentions that rival LG Display is likely to supply some OLEDs for the new iPhones, but cautions that the Korean supplier has also struggled to boost yield.

According to Display Supply Chain Consultants, LCDs will continue to decline as OLEDs pick up steam. Next year, they’re expecting 1.143 billion LCD shipments and 0.592 billion OLEDs. In 2020, LCDs should drop to 1.018 billion units while OLEDs will ship 0.77 billion units.

In other words, OLEDs are growing in popularity, but cheaper LCDs aren’t going away yet.

Thoughts?

Image top of post: a mockup of Apple’s rumored 2018 iPhone lineup, via Wylsacom