Apple has terminated its MicroLED project for the future smartwatch expected to be released in 2026 (Apple Watch Ultra 3) and invested over $1 billion to build a microLED factory for collaboration with Apple by ams OSRAM, subsequently announcing a decision to reassess its Micro LED development strategy.
Aldo Kamper, CEO of OSRAM, expressed shock and disappointment during a conference call, stating that the company has been investing $1.4 billion in Malaysia to establish a factory dedicated to Micro LED. With the unexpected cancellation of the project, OSRAM is now seeking to sell the factory.
Without the production scale of Apple, OSRAM does not require that huge, brand-new $1 billion Kulim factory with a size of 200 millimeters.
Following OSRAM’s announcement, the company’s stock price plummeted on the 29th.
According to the Latest report, ams OSRAM expects to record non-cash impairment losses of €600-900 million in the first quarter of 2024 related to Micro LED assets and goodwill, which may affect ams OSRAM’s operating profitability (adjusted EBITDA) for the fiscal year 2024, estimated in the range of €30-50 million. Currently, ams OSRAM is in discussions with relevant customers.
Meanwhile, hundreds of employees working at Apple’s secretive facility in California have been laid off.
Yole has categorized microLED applications into two distinct groups. For AR, automotive, and some specialized applications (transparent displays, stretchable displays, etc.), Yole considers microLED to be driven by technology: microLEDs offer differentiation and bring some very desirable unique features, so OEMs will be eager to adopt them as soon as they are available. For all other applications, including most consumer displays such as TVs, smartphones… and smartwatches, OLED has performed well and is continuously improving. For these players, microLED needs strong supporters to succeed: companies committed to making long-term, high-intensity efforts to develop technology, build supply chains, and scale up.
So, does Apple essentially kill the microLED industry? Yole doesn’t think so. Yole’s report indicates that Apple is not the only company firmly committed to microLED: companies like AU Optronics and the strong Taiwanese ecosystem have been actively driving the development of microLED. Taiwan missed the OLED boat, and microLED is Taiwan’s opportunity to return to the forefront of display technology.
Since the release of the first microLED report in 2017, Yole’s analytical perspective has remained unchanged: smartphones are the most challenging application for microLEDs to date. However, this is the final stage of Apple’s microLED strategy. It is mainly about chip sizes, transmission challenges, and so on. We believe that if it does happen, only Apple can do it.
But Apple’s idea is to first develop an easily achievable target, namely smartwatches, and if that becomes a reality, the next step will be smartphones. Since smartwatches have now exited the market, Yole believes there won’t be any microLED smartphones in the foreseeable future unless they adopt different innovative form factors and offer unprecedented performance and features, all at an acceptable cost.
However, this scenario is unlikely to occur in the short term.
