Apple’s drastic cuts to production expectations for its Vision Pro headset have focused attention on the device’s most expensive component: the tiny, tiny OLED screens required 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 people 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 convenient postage-stamp-sized product.
While the organic light-emitting diode (OLED) displays used in high-end smartphones are deposited on a glass substrate, small OLED screen materials are deposited on a silicon wafer that is more commonly used for semiconductor production.
The current generation of small OLEDs has a resolution of 3,000 pixels per inch (PPI) — six times the PPI in a glass OLED screen, and greater 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 ruined by tiny specks of dust that get in during the manufacturing process, and the fact that no company has yet begun mass production all contribute to its prohibitive cost.
Eric Chiu, senior vice president of research at TrendForce, estimates the total cost of the two small OLED screens — one for each eye — in the Apple Vision Pro, at $700, roughly half the product’s manufacturing cost due to retailing at $3,499 when it was released in the US early on. Next year.
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 comment on whether it is a supplier of the Vision Pro, is reluctant to ramp up production of displays, amid doubts about the future growth prospects of the mixed reality headset market.
We’ll be watching to see how big the order 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 that they 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 since it has been making larger quantities in the past for use in viewfinders for digital cameras.
However, Hayase said the market is unlikely to expand significantly with the launch of Apple’s Vision Pro. “There are expectations but quite a number of companies have already defied [augmented reality] market and it didn’t work.”
For Sony, it may have simply felt like there was no reason to say no because Apple is a customer and numbers are great [of Vision Pro that will be sold] It is likely to be limited.
Analysts said Sony’s unwillingness to fully commit to the technology provides an opportunity for Korean competitors Samsung Display and LG Display to emerge as major suppliers of small OLED displays for the Vision Pro and its successors.
Samsung Display, which acquired American small OLED producer eMagin for $218 million in May this year, is building a manufacturing facility for small OLED displays at its South Korean plant, with the goal of starting production testing next year.
LG Display, which produces outdoor OLED screens on the Vision Pro’s inaugural model, revealed 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.
China-based company SeeYA has also sent multiple prototypes of small OLED screens to Apple, according to two people familiar with the situation. 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 have yet been able to meet Apple’s expectations for the technology, amid ongoing concerns about component cost.
They added that Apple was not willing to compromise the quality of displays with alternative technologies, even for future mass-market models.
Yi Choong-hoon, a display industry expert and head of Seoul-based UBI Research, said Samsung is “in the best position to supply Micro OLED for Apple’s Headphone Edition 2,” but cautioned that “the throughput rate is not generally good across the industry.”
“It is not easy to boost the rate of return because the pixels are too compact and the chip prices are too expensive,” Ye said. “They won’t be able to lower the prices of micro OLED 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 was awarded a contract by 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.
Nam Sang-ok, a researcher at the state-run Korea Institute of Industrial Economics and Trade, said all display makers face a dilemma as to whether resources should be allocated to producing components for what remains a relatively adequate product, given the density of the display. Competition elsewhere in the supply sector.
“In order to enhance the return rate of small OLED screens, Samsung and LG need to invest billions of dollars,” Nam said. But it is not their top priority. . . Their focus will remain on OLED displays for TVs, tablets, and foldable phones for now, as mixed reality headsets are unlikely to be sold in large quantities anytime soon. “
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