Shipments of LG Display's organic light-emitting diode (OLED) panels for Apple Watch models launching this year are expected to increase. Until now, LG Display and Japan Display Inc. (JDI) have supplied OLEDs for Apple Watch, but with JDI exiting the business, LG Display is reportedly poised to effectively monopolize supply. The new Apple Watch is expected to add healthcare features, which is projected to boost sales.
According to the industry on the 18th, LG Display's OLED shipments for Apple Watch to be supplied to Apple this year are understood to increase by nearly 20% from a year earlier. A display industry official said, "With expectations of strong sales for the new model thanks to expanded healthcare features on Apple Watch, shipments are likely to rise by about 20% year over year," adding, "Starting this year, LG Display will secure a monopolistic position within the supply chain, which will also help improve profitability." According to research firm Canalys, Apple Watch sales last year were around 30 million units.
LG Display is said to be the exclusive supplier of OLEDs for Apple Watch starting this year. Until now, OLEDs for Apple Watch have been supplied by LG Display and JDI. Within the supply chain, LG Display was known to have held more than an 80% share. However, as JDI withdraws from the Apple Watch OLED business, the structure is expected to shift to LG Display effectively supplying exclusively.
JDI was established in 2012 under the leadership of the Japanese government by integrating the small and midsize liquid crystal display (LCD) businesses spun off from Sony, Toshiba, and Hitachi. JDI was once called "the pride of Japan's display industry," but as it recently struggled with financial difficulties, it reportedly decided to halt its Apple Watch OLED business as part of a restructuring.
Marking the 10th anniversary of the Apple Watch, Apple is expected to spur replacement demand by newly adding healthcare features. Kim Jong-bae, an analyst at Hyundai Motor Securities, said, "With the expansion of (Apple Watch's) healthcare features, strong sales of the new model are expected, and annual volume is likely to increase by about 18% compared with last year," adding, "Because it is a product with a high operating margin, its contribution to profit is also expected to expand meaningfully."
According to financial information provider FnGuide, LG Display's operating profit forecast for this year is 668.6 billion won, indicating a turnaround from an operating loss of 560.6 billion won last year. In particular, as the iPhone lineup adopting OLED expands, most analysts expect shipments of mobile OLEDs to increase. With the launch of new Apple iPad models, supplies of IT OLEDs are also expected to rise.
Jung Won-seok, an analyst at iM Securities, said, "In addition to the effect of new smartphone launches by a key North American client, shipment delays caused by initial quality issues at a domestic competitor are expected to bring a windfall," adding, "LG Display's operating profit in the third quarter of this year is projected to turn to a surplus at 451 billion won, beating the market consensus (292.2 billion won)."