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The Apple iPhone (AAPL) has seen its average selling price soar since the launch of the iPhone X two years ago. One reason is that the technology giant has passed on the higher costs of OLED displays on X models to its customers.
At present, Samsung (SSNLF) is the only supplier to manufacture high quality OLED screens for smartphones. As a result, the South Korean electronics giant will charge Apple nearly $ 100 per screen, according to some reports.
Apple has tried to get its OLED screens from other suppliers. Although the company contacted LG last year to purchase OLED displays, LG only manufactures OLED displays for TVs. LG has not yet developed the manufacture of a robust OLED panel for smartphones. As a result, Apple has stayed with Samsung OLED screens more expensive.
Apple is looking to reduce its dependence on Samsung
However, the situation around OLED panels may be changing. According to Nikkei Asian Review, Apple is about to sign an agreement with the Chinese company BOE for OLED panels for its iPhones.
According to the report, "Apple is in the process of finalizing the certification of advanced displays by the largest Chinese display manufacturer BOE Technology Group for iPhone next year. "However, the iPhone maker seems to be cautious. The report added:Apple will decide by the end of this year if BOE will become the most expensive supplier of its component. "
OLED panels are considered superior to LED displays because of their ability to better represent colors. In addition to being less battery hungry than LED displays, OLED displays are also lighter and more flexible.
New OLED provider could improve AAPL's profitability
Recruiting a new supplier could help reduce the cost of OLEDs by increasing Apple's bargaining power with Samsung. In turn, this could give Apple the flexibility to pass on the cost benefits to its customers. Rising costs and other factors have led to a contraction in Apple's margins in recent quarters.
The drop in the price of the iPhone could help the company to increase its shipments in price-sensitive countries, such as India. Already, there were signs of improvement in India after the company bought the iPhone XR in India. Apple also produces more iPhone in India to circumvent the country's heavy import tax, which should also help sell in the world's second largest smartphone market.
The technology giant is keen to increase its iPhone sales as its iPhone revenues have contracted year over year over the last three quarters.
Apple is expected to launch three new iPhones in September. Two of these phones could have an OLED display, and the third should be the successor of the iPhone XR, which has an LCD screen. The Apple stock rose 1.1% on Wednesday, August 21st.
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