Shulou(Shulou.com)11/24 Report--

The relationships between many companies in the tech industry are not simply good or bad, but complex. Apple and Samsung, for example.

On the one hand, Apple's top-of-the-line screen depends on Samsung; on the other hand, Apple sued Samsung in 2012, accusing Samsung of patent infringement on Galaxy phones.

The two companies settled the dispute five years ago, but Apple has also further reduced its dependence on Samsung. In parts such as memory chips, Apple finds other partners (such as Armor); for more core components such as processors, Apple replaces them with internally-developed products/in-house products (-/in-house).

Apple took Samsung to court because the original Galaxy was so similar to the iPhone and Samsung refused Apple's patent licensing offer.

However, Apple still can't completely break up with Samsung, because most of the goods are purchased from Samsung in the screen, which is one of its core competitiveness. This relationship between enemies and friends makes the atmosphere of cooperation between the two companies very tense.

Many former Apple employees said that Samsung is very distrustful of Apple and prohibits Apple engineers from entering its factories.

In 2017, Apple engineers flew from the United States to South Korea to meet with employees in Samsung's display division, only to be told they couldn't enter certain facilities, such as office buildings, because Samsung wanted to protect its OLED screen intellectual property. As a result, Apple engineers, although they went to South Korea, were video calling Samsung engineers in Korean hotels.

Samsung initially barred an Apple security officer from auditing a factory in Vietnam that assembles display modules for the iPhone X, but then compromised slightly: The security officer could enter, but only if he was "escorted" and kept walking, without stopping to observe.

Apple engineers also sent samsung a questionnaire asking for more screen-related information, but samsung didn't answer, just wrote "confidential."

People familiar with the matter said that because of the cold relationship between the two sides, it was difficult for Apple to understand how Samsung solved the manufacturing problem of iPhone screens. In order to eliminate potential defects as much as possible, Apple can only conduct more rigorous testing of the screen during product development.

Samsung's unusual treatment of Apple is also due to Apple's reputation for high confidentiality and high-pressure when working with suppliers. However, Apple, which is used to arrogance, still works closely with Samsung. The competitive advantage of Samsung's screen is self-evident. Apple still can't get rid of Samsung's dependence in this respect.

Apple's smartphone shipments surpassed Samsung again in the fourth quarter of last year, becoming the world's No.1 source: Counterpoint makes this relationship more complicated because they are not simple supply relationships, Samsung is also a mobile phone manufacturer, or Apple's biggest competitor. Although Apple has other screen suppliers such as LG, it has had limited success in getting rid of Samsung.

In addition to expanding its supply, Apple has been pursuing MicroLED display technology for the past decade, but MicroLED screens are far more difficult to manufacture than expected. Apple's partnership with Samsung deepened during this period, as commercial use of the technology was significantly delayed.

Apple hopes to replace some Apple Watch screens with MicroLEDs next year, but it's hard to use the technology on larger screens like iPhones and iPads, so Apple will need Samsung for years to come, according to several people involved in the project, analysts and others familiar with the technology.

Apple's MicroLED development program, codenamed "T159," was taken over by Johny Srouji, senior vice president of hardware technology, in a reorganization two years ago, who also took over the hardware team for cameras and touch sensors.

Srouji's main achievement at Apple is to reduce its dependence on Samsung and Intel, which not only reduces costs, but also increases the uniqueness of its own products.

The screen is the core component of Apple's mobile devices and the bulk of their cost. Apple paid $57 billion to its 10 largest suppliers in 2014, according to internal data, while Samsung, LG, Sharp and Japan Display accounted for 37 percent, while Samsung alone accounted for $9.6 billion. Samsung is Apple's second-largest supplier by cost, behind Foxconn.

In terms of display technology, Apple has always been at the top of the wave, often launching new technologies to improve resolution, color accuracy, contrast, viewing angle and even extend battery life, such as the retina screen of iPhone 4, 120Hz high brush of iPad Pro 2 generation, etc. As iPhone sales slow, maintaining a lead in technology means a lot to its market share.

Apple and Samsung Display declined to comment.

OLED, let Samsung prevail Apple's routine is to let multiple suppliers compete, thus driving down prices.

But unlike most Apple suppliers, Samsung has a big family and can compete with Apple."Fruit Chain" is just one of the small labels. As a South Korean head consortium, Samsung is strong enough in shipbuilding, heavy industry, home appliances and screens in addition to electronics.

On traditional LCD screens, Apple suppliers have many homes, and the procurement difficulty is low. But starting with the iPhone X, Apple phones are basically using more advanced OLED screens, and Samsung is the leader in this field, accounting for 70% of the world's share (LG in second place only accounts for 20%). Analysts expect Samsung to supply about 70 percent of the iPhone's screen.

OLED screens are relatively cumbersome to produce because they require evaporating multiple layers of organic material in a vacuum and creating precise pixel patterns on the screen through metal masks (similar to the templates used to print text or patterns). Screen defects can easily occur during manufacturing, but minor adjustments in design, materials and manufacturing can eliminate these problems, which affect the manufacturer's shipments to customers.

Former Apple employees say Samsung has fine-tuned its OLED production over the past decade and is still the strongest in the industry. Apple also buys OLED screens from LG and BOE, but the size and quality of these two still can't compete with Samsung.

Ross Young, CEO of Display Supply Chain Consultants (DSCC), a research firm, said: "Samsung has been working on OLED screens since the mid-1990s, and no other manufacturer can catch up. "

Initially, Samsung was Apple's main LCD supplier. Later, Samsung's absolute advantage in LCD no longer exists, Apple also has LG, Sharp, Toshiba, JDI. Samsung opted out completely, using its overwhelming dominance in the next generation of technology (OLED screens) to force Apple to come back to it again.

A former Apple employee said Samsung forced Apple to accept hundreds of thousands of extra MacBook screens a few years ago, even though Apple lowered its demand expectations for MacBooks. By contrast, most other Apple suppliers assume the financial risk of storing and absorbing the cost of unwanted parts.

Samsung shipped millions of LCD screens to Foxconn in 2012, when Foxconn assembled the first iPad mini with a high-resolution screen (retina screen). Apple engineers examined the screens and found minor flaws. While most consumers won't notice these flaws, they don't meet Apple's quality standards.

Samsung refused to replace the screen and Apple could only continue to use it, according to a person involved in assembling the product. Another former Apple employee said that a few years later, a similar incident occurred on the MacBook screen, forcing Apple to postpone production.

Over the years, Apple has tried to replace screen suppliers to reduce its dependence on Samsung, with mixed results.

In 2015, Apple released the first Apple Watch, which was also the first Apple product to use OLED screen-mainly LG's goods, although Samsung was the leader in OLED.

In 2016, Apple began working with BOE. According to former Apple employees, BOE supplies LCD screens for iPads and MacBooks at a much lower price than companies such as Samsung.

In 2017, Apple first used OLED screens on the iPhone, coinciding with the iPhone X, which was larger in size, so it didn't dare to take risks and chose Samsung screens.

Although LG is the closest screen manufacturer to Samsung, Apple's iPhone flagship has never used their OLED screen. Two former Apple employees revealed that LG had tried to supply OLED screens for some iPhone 12 and iPhone 13, but was told that the quality did not meet Apple standards, had to be used as a "second supply," topped when capacity was insufficient, and only involved digital series.

LG executives complained that Apple canceled LG's iPhone 13 Pro screen supply at the last minute. However, considering the relationship of cooperation for six years, Apple also promised to order some screens of iPhone 14 Pro from LG.

On OLED screens, Apple has become the object of manipulation and even has to pay huge fines for unused OLED capacity. In 2019, Apple paid Samsung a fine of nearly $700 million for failing to meet its minimum OLED order volume target. In 2020, Apple paid Samsung nearly $1 billion for the same reason.

There is also a story behind the iPhone 14 Pro's "Smart Island" picture, which replaces the previous Liu Hai screen with a pill screen. A person familiar with the matter said Apple had discovered that cutting the screen for the camera left debris and residue, so it did not meet Apple standards, and asked Samsung to add a screen cleaning step, but was rejected. After some haggling, Samsung agreed.

Apple bet on MicroLED, but the relationship between Apple and Samsung has been tense, the biggest reason is that Apple misjudged the time it took to mass produce MicroLED screens.

In 2014, Apple acquired LuxVue, a Silicon Valley startup, and began to get involved in MicroLED screen research and development, and gradually gathered a lot of talents. LuxVue offers a unique solution for manufacturing MicroLEDs that promises to outperform existing technologies in brightness, dynamic range, viewing angle, durability and energy efficiency.

A year later, Apple bought a small screen factory from Qualcomm to get involved in screen manufacturing.

Apple initially intended to use MicroLED screens instead of OLED screens on the iPhone X. A former Apple executive involved in discussing the screen roadmap revealed that although OLED is more advanced than LCD, some executives inside Apple don't like it because OLED is still difficult to see in sunlight.

However, many people involved in the project said that the high cost of manufacturing MicroLED screens, combined with the long time required and the high possibility of defects, the plan was greatly delayed.

The crux lies in pixels. MicroLEDs have smaller pixels than OLEDs. Pixels are first created on silicon wafers in a process similar to semiconductor production. Human hair is about 75 microns in diameter, and Apple MicroLED pixels are less than 10 microns in diameter, which makes making MicroLED screens a huge challenge because pixels must be picked up and transferred to another surface by a tiny device. LuxVue has designed a way to achieve this using static electricity.

On MicroLED, Apple is still starting from a small screen, and Apple Watch may be the first product to eat crabs.

Apple's acquired screen factory is operating an experimental production line that can produce 2-inch MicroLED screens. But two people familiar with Apple's plans said that while Apple initially intended to launch an Apple Watch with a MicroLED screen this year, it could now be as early as 2024, given the technology's maturity.

According to former Apple employees, Apple is also in talks with LG and Sharp to mass-produce Apple Watch screens based on MicroLED. Samsung is already making MicroLED TVs, but that's much easier because the screens are larger in size, the pixels are bigger, and the flaws are less obvious because watching a TV isn't as close as watching a phone.

It is said that some people inside Apple believe that MicroLED will not be applied to devices such as iPhones and iPads in the short term. Some people involved in the project said that some team members have already left, such as Meta to work on MR product development; Lynn Youngs, an Apple executive who helped launch MicroLED, retired in 2021. Three people familiar with the matter said the team had made slow progress over the past decade, adding to the pressure to come up with products.

Apple and samsung have parted ways on bets on the future of technology.

A person familiar with the matter revealed that Apple plans to carry Sony and LG screens on its upcoming Mixed Reality (MR) headset. For the rumored folding screen iPad, Apple's main partner of choice is also LG.

Analysts say Apple is gradually shifting screen orders to LG and BOE for flagship iPhones and iPads. But Apple will have to rely on Samsung for its first OLED iPad next year. Samsung is likely to remain the main screen supplier for high-end iPhone models for years to come.

Samsung used OLED to re-handle Apple, and Apple has been trying to get rid of it. Diversifying orders is just a painkiller, but this complex relationship will continue as long as Samsung remains the technology leader.

So Apple is still secretly counting on technological innovation to break the game, trying to replicate the surprise of the A-series self-developed chips.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.