Apple’s drastic cuts to production expectations for its Vision Pro headset have drawn attention to the device’s most expensive component: the tiny OLED displays needed to produce truly immersive experiences.
The Financial Times reported this week that the US tech giant believes it will produce fewer than 400,000 units in 2024, having previously set an internal sales target of 1 million units in the first 12 months.
One problem is the design intricacies of Apple’s new “mixed reality” headset. According to those involved in the production process of the Vision Pro, this includes the costs and technical challenges of using small OLED screens, which is a relatively practical product the size of a postage stamp.
While organic light-emitting diode (OLED) displays used in high-end smartphones are deposited on a glass substrate, small OLED display materials are deposited on a silicon wafer which is more commonly used for the production of semi -drivers.
The current generation of small OLEDs have a resolution of 3,000 pixels per inch (PPI) – six times the PPI in a glass OLED display, and higher than the resolution of a high-end 4K TV per eye.
But the cost of a silicon wafer, the challenge of making a product that can be marred by tiny specks of dust that get in during the manufacturing process, and the fact that no company has yet started mass production all contribute. all at its prohibitive cost.
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According to two people familiar with the Vision Pro’s manufacturing process, the small OLED displays for the first iteration of Apple’s flagship speakers are produced by Sony, which pioneered the technology for use in its digital cameras. using silicon wafers produced by Taiwanese semiconductor manufacturer TSMC. .
But the Japanese tech giant, which declined to say whether it is a supplier of the Vision Pro, is reluctant to ramp up display production amid doubts about the future growth prospects of the mixed reality headset market.
We will look to see what the order size is [for micro OLED displays] Terushi Shimizu, head of Sony’s semiconductor unit, said last week, “I don’t think we’re going to be aggressive” in producing displays with the same scale of image sensors as they do. provide for smartphone cameras.
Hiroshi Hayase, a display expert at Omdia, said Sony likely has the ability to ramp up production of fairly small OLED displays, as it has manufactured larger quantities in the past for use in camera viewfinders. digital.
However, Hayase said the market is not expected to grow significantly with the launch of Apple’s Vision Pro. “There are expectations but a number of companies have already challenged [augmented reality] worked and it didn’t work. »
For Sony it may have just seemed like there was no reason to say no because Apple is a customer and the numbers are great [of Vision Pro that will be sold] It may be limited.
Analysts said Sony’s complete reluctance to commit to the technology presents an opportunity for Korean rivals Samsung Display and LG Display to emerge as leading suppliers of small OLED displays for the Vision Pro and its successors.
Samsung Display, which acquired small U.S. OLED producer eMagin for $218 million in May this year, is building a manufacturing plant for small OLED displays at its South Korean factory, aiming to begin production testing next year.
LG Display, which produces outdoor OLED displays on the inaugural Vision Pro model, unveiled its small OLED prototype at the annual Consumer Electronics Show in Las Vegas in January.
The Financial Times reported this week that Apple is working with Samsung and LG on developing future generations of its headphones, including a cheaper version of the Vision Pro designed to appeal to mass-market consumers.
Chinese company SeeYA has also sent several prototypes of small OLED displays to Apple, according to two people familiar with the matter. Two people close to Apple said Apple has engaged with the group, sending employees to work with SeeYA and providing feedback on the samples.
But two people with direct knowledge of the process said none of the display makers had yet been able to meet Apple’s expectations for the technology, amid ongoing concerns over component costs.
They added that Apple was not willing to compromise screen quality with alternative technologies, even for future consumer models.
Yi Choong-hoon, display industry expert and head of research at Seoul-based UBI, said Samsung was “best positioned to supply Apple’s V2 headset” but cautioned that ” throughput is generally not good in the industry”.
“It is not easy to increase the yield rate because the pixels are too compact and the chip prices are very expensive,” Ye said. “They won’t be able to lower the prices of micro OLEDs anytime soon. »
Yi added that Chinese companies may find it difficult to supply small OLED panels to Apple in the future due to their potential military application.
Last year, eMagin won a contract from the US Army to explore display technologies to provide sensors and tactical data to US soldiers. Washington has restricted the export of technologies, including advanced semiconductors, that it believes the Chinese military could use.
Given the intense pressure, all display makers face a dilemma about whether to devote resources to component production for what remains a relatively affordable product, said Nam Sang-ok, a researcher at the Korea Institute of Industrial Economics and Commerce. Competition elsewhere in the supply sector.
“In order to increase the yield rate of micro OLEDs, Samsung and LG need to invest billions of dollars,” Nam said. But it’s not their top priority. . . Their focus will remain on OLED screens for TVs, tablets and foldable phones for now, as mixed reality headsets are unlikely to sell in large quantities anytime soon. ”
