"OLED iPhone panel supply is controlled wholly by Samsung, not Apple," Ming-Chi Kuo, an analyst, wrote on Wednesday. Here's what that means for the iPhone 8.
The most important part of Apple's upcoming iPhone is its screen, which is widely expected to use a newer kind of display technology called OLED.
And the only company that can make them in large numbers up to Apple's standards is also its top competitor in the smartphone market: Samsung.
"OLED iPhone panel supply is controlled wholly by Samsung, not Apple," Ming-Chi Kuo, an analyst at KGI Securities, wrote in an Apple Insight note dated Wednesday and seen by Business Insider.
"This fact explains why, first of all, Samsung has higher bargaining power and, second, why OLED panel module is likely priced at US$120-130 per unit (vs. 5.5-inch iPhone's LCD module price of US$45-55 per unit)," he continued. "This is also why Apple is in urgent need of finding a second source of OLED."
Apple needs millions of OLED screens. Kuo previously forecast that between 45 million and 50 million of the "OLED iPhone" would be assembled in the upcoming year, though only 2 million to 4 million units are expected to be built this quarter.
Kuo gave some insight into how involved Samsung is in the production process — it's providing some parts, including an OLED panel and OLED touch panel, but it's also combining it with modules from other companies and shipping it to Foxconn for final assembly.
That's a lot of responsibility for a single supplier — and it suggests that any slowdown at Samsung Display could affect iPhone availability. There are already lots of warnings that iPhone 8 supply could be short this fall.
Kuo also mentioned that Apple "may abandon" its fingerprint-recognition scanner, TouchID, as has been forecast for months.
"We believe 3D Touch module could be unfavourable for scan-through performance of under-display fingerprint recognition," Kuo wrote, suggesting that future iPhones may have to choose between 3D Touch, a feature that makes touchscreens pressure-sensitive, or TouchID, the fingerprint scanner that has been included on all new iPhones for the past few years.
KGI Securities' Apple Insight notes are targeted toward investors who may want to take a stake in Apple's suppliers. A detailed chart included in the note identifies 16 companies contributing parts to the screen that will cover the upcoming iPhone:
One interesting detail: Kuo suggested Canon Tokki was the sole provider of critical "evaporation equipments" to Samsung, which Bloomberg previously reported.
Kuo wrote that most of these companies would continue to be suppliers for next year's iPhone models, which positions them for further growth.
Apple will launch its new iPhones on September 12. Aside from the OLED iPhone, Apple is expected to launch two other models that are more similar to the current iPhones on sale and are forecast to use the older LCD technology but sport other improvements, including faster charging and potentially redesigned housing with glass casing.
But most gadget fans will want the OLED iPhone, which packs more screen area into a smaller phone, features a new 3D front camera, and may be able to be unlocked by scanning the users' face.
Here's what it could look like, based on rumors and reports: