Apple is testing advanced screens from leading Chinese display maker BOE for iPhones next year, as the United States tech giant attempts to cut costs and reduce reliance on South Korea’s Samsung, the Nikkei Asian Review reported on Wednesday.

Why it matters: If Apple chooses BOE’s screens, the Chinese state-owned company could begin to challenge Samsung’s supremacy in the display panel sector.

  • The sector has been propped by Beijing with billions of dollars of state and public funds over the past decade.
  • The global display panel market is expected to rise from last year’s $25.5 billion to more than $30 billion this year, according to IDTechEx Research.
  • However, BOE is still vulnerable to a potential clampdown from the US, possibly restricting supplies of crucial materials from Corning, 3M and Applied Materials, said the report.

Details: Apple is “aggressively testing” BOE’s flexible organic light-emitting diode, or OLED, displays, and will decide by the end of this year whether to take BOE on as a supplier of this single most expensive component, said sources quoted by Nikkei.

  • Apple is currently testing BOE’s flexible OLED displays from the company’s facility in the southeastern Chinese city Chengdu, said the sources.
  • BOE is also building another facility in Sichuan Province, which would be allocated to Apple if it places orders, they said.

Context: An OLED display is the most expensive component on the iPhone. It accounts for nearly 30% of the total cost of the iPhone X released in 2017 and was sourced from Samsung.

  • BOE-made OLED displays could be 20% cheaper than Samsung’s products, said Nikkei, citing a source familiar with the matter.
  • BOE was founded in 1993 in Beijing as a military and defense supplier and has become a major recipient of Chinese government’s grants and subsidies. The company received over RMB 2 billion (around $283 million) in subsidies last year, said the report.

Writing about semiconductors and telecommunications.

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