Challenges in the Micro/Mini LED Industry
In the first quarter of 2024, several critical events shook the Micro/Mini LED industry, including the unexpected cancellation of a major Micro LED project, casting uncertainty over the technology’s future.
On February 28, ams OSRAM announced the abrupt cancellation of a crucial Micro LED initiative, prompting a reassessment of strategies, particularly concerning its 8-inch LED wafer facility in Kulim, Malaysia. The company projected a non-cash impairment loss between 600 to 900 million euros related to Micro LED assets and reputation for the first quarter of 2024.
According to earlier supply chain updates, the termination of ams OSRAM’s Micro LED project was linked to Apple’s smartwatch production. Noted Apple analyst Ming-Chi Kuo later confirmed that Apple had discontinued its Micro LED smartwatch development and dissolved most of the team involved.
Ripple Effects Across the Industry
Apple’s cancellation triggered a ripple effect across the supply chain. Reports indicate that ams OSRAM might downsize its Micro LED project and move operations from Malaysia to Germany. LG Display’s strategic customer division began layoffs in its Micro LED team, while semiconductor packaging equipment supplier K&S canceled its “W project,” believed to be connected to Apple’s smartwatch. Additionally, Samsung is reported to have delayed or canceled its Micro LED smartwatch plans.
Despite rumors that Apple is exploring alternative suppliers for its Micro LED project, it’s clear that the anticipated Apple Watch Ultra with Micro LED displays will not be released anytime soon.
Why Did Apple Cancel the Micro LED Apple Watch Project?
The cancellation of Apple’s Micro LED smartwatch project was unexpected yet somewhat foreseeable. The surprise was that, despite repeated delays over the past year, the project seemed likely to enter mass production in 2025 or 2026. Related LED industry chain companies had already started preparing production lines and equipment, signaling new opportunities for the large-scale application of Micro LED technology. However, Apple ultimately paused the project.
It was anticipated because Micro LED technology is not yet fully mature. It is well known in the industry that Apple’s focus on Micro LED technology is not new. It dates back to 2014 when Apple acquired Micro LED technology firm LuxVue, which specialized in low-power Micro LED display technology for consumer electronics.
After acquiring LuxVue, Apple intensified its Micro LED project research and developed different display solutions for smartwatches, AR, and other products. Public data shows that by 2021, Apple had acquired nearly 400 patents related to Micro LED. Additionally, Apple equipped its team with researchers specialized in Micro LED.
In 2019, reports indicated that Apple was in talks with PlayNitride and RiTdisplay to supply Micro LED screens for the Apple Watch. In 2020, the Taiwan Science Park Management Bureau approved Apple’s, AUO’s, and Epistar’s Micro/Mini LED display factory construction plans. Subsequently, LG Display and ams OSRAM were also reported to have joined Apple’s Micro LED technology supply chain.
Over the past decade, Apple has invested considerable human and financial resources into Micro LED, which has also spurred other players to participate. While Micro LED technology has made significant performance improvements and cost reductions, it is still far from large-scale commercial application. According to Ming-Chi Kuo, the project’s cancellation is due to high costs that do not significantly enhance the product’s added value.
TrendForce’s senior research vice president, Qiu Yubin, further analyzed the reasons behind the decision. From a cost perspective, the estimated cost of producing Micro LED smartwatch screens is about $120, while the current cost of OLED screens of the same size is around $40, representing a cost difference of approximately 1.5 to 3 times.
The cost disparity is mainly due to the immaturity of Micro LED technology. For example, despite Apple’s use of 8×8 micron Micro LED vertical chips to lower costs, vertical chip technology has not yet overcome yield transfer bottlenecks.
Strategically, recent breakthroughs in generative AI and other artificial intelligence technologies have shifted Apple’s focus from merely improving hardware performance to developing AI-powered products. Consequently, Apple not only canceled the Micro LED smartwatch project but also halted its automotive project, redirecting resources to AI technology initiatives.
Apple Halts Mini LED Adoption
Coincidentally, Apple’s use of Mini LED technology also saw changes last year. Apple plans to replace the current Mini LED backlighting panels with OLED panels in the new iPad Pro. The new generation iPad Pro is scheduled for release in May this year, and the display technology to be used will be officially announced. By 2027, Apple may also introduce nine OLED devices, including iPad tablets and MacBook laptops.
Previously, reports indicated that BOE and Samsung’s OLED display line construction and capital expenditure might be related to Apple, partially validating Apple’s future display technology plans.
Unlike Micro LED, Apple’s current products employing Mini LED technology include the first professional-grade display Pro Display XDR, the 5th and 6th generation 12.9-inch iPad Pro tablets, and the 2021 and 2023 14/16-inch MacBook Pros. Mini LED technology is already applied in Apple’s displays, tablets, and laptops.
Apple’s shift to OLED technology will impact Mini LED’s application in laptops and tablets.
Qiu Yubin has stated that Mini LED backlighting, influenced by Apple’s brand effect, has officially entered the laptop and tablet markets. With Apple increasingly focusing on OLED technology, the future shipment volumes of Mini LED tablets and laptops are expected to decrease, raising concerns within the LED industry about the future growth of Mini LED backlighting.
According to TrendForce’s report “2024 Mini LED New Backlight Display Trends Analysis,” Mini LED backlight shipments for tablets and laptops saw a turning point in 2023 due to the expansion of RGB OLED. The shipment volume for Mini LED backlight laptops decreased by about 39% year-on-year, and the shipment volume for Mini LED backlight tablets decreased by about 15.6% year-on-year, partly due to the discontinuation of the 12.9-inch iPad Pro in 2024.
Amidst Uncertainty, Micro/Mini LED Industry Remains Stable
Undeniably, Apple’s cancellation of the Micro LED smartwatch project has impacted Micro LED development. Qiu Yubin remarked that the project’s cancellation will affect the Micro LED industry, causing investment focus to become somewhat unclear and slowing down funding influx, which may also slow the development of Micro LED technology and specifications.
Despite Apple’s strategy shift, which alters the current trajectory of new display technology applications, the industry remains optimistic about the future of Micro/Mini LED technologies.
In reality, Apple’s current use of Micro/Mini LED technologies does not significantly overlap with the primary application scenarios of these technologies. Mini LED backlighting is mainly used for televisions and IT products, while direct-view technology is applied in large-size displays. Currently, Micro LED is primarily used in large-size displays, with future developments likely to focus on high-brightness, micro-size displays for AR/VR headsets and automotive transparent displays—applications where Micro LED has clear advantages.
In the long term, Apple’s current strategy adjustments are unlikely to have a major impact on the development of Micro/Mini LED technologies. For example, despite Apple’s recent decision, the Micro/Mini LED industry has continued to progress, with new products, projects, and investments showing increased activity.
40 New Micro/Mini LED Products Launched in Q1
From a terminal manufacturer perspective, most companies remain optimistic about the prospects of Micro/Mini LED technology and continue to promote new Micro/Mini LED products, aligning with industry trends.
Mini LED backlighting technology continues to be concentrated in television products, with 18 new Mini LED backlight television models launched in the first quarter. There were also 12 new Mini LED backlight monitors and 3 new laptops. All categories showed a year-on-year growth trend, and it is anticipated that the number of Mini LED backlight new products will reach a new high in 2024.
Micro LED technology has also seen some progress in consumer applications. Large-size televisions and AR glasses are the main focus areas. In the first quarter, Samsung introduced 114-inch and 76-inch Micro LED televisions, TCL released the Micro LED TV X11H Max, and OPPO and Thunder Innovation launched the Micro LED AR glasses Air Glass 3 and X2 Lite, respectively.
20 Major Projects Progressing and 6 Companies Securing Funding
In the first quarter, the progress of Micro/Mini LED-related projects continued, with 6 projects signed, 4 under construction, 3 reaching completion, and 7 entering production. The total investment amount for 20 projects is approximately 80 billion yuan.
In terms of financing, 6 Micro/Mini LED companies completed new funding in the first quarter, with 5 of them being Micro LED companies involved in chips, packaging, driving, displays, and equipment.
Despite Apple’s decision to cancel its Micro LED project, the Micro/Mini LED industry has maintained stability in development, with continued growth in terminal applications, orderly capacity construction, and ongoing capital investment.
Qiu Yubin stated that while Apple’s project cancellation has led to a slight downturn in Micro LED development, the industry has not chosen to “lie flat.” The industry continues to work on reducing Micro LED costs, aiming to advance from the current 34×58 micron chips to even smaller 15×30 micron sizes.
Display panel manufacturers continue to invest resources in developing Micro LED products, with companies like Samsung, LG, Sony, BOE, TCL, and others persistently working on large Micro LED displays.
Regarding smartwatch products, aside from Apple, AUO continues to develop its 1.39-inch Micro LED products and has secured orders from a Swiss watchmaker, starting limited shipments.
In the Mini LED backlight technology sector, TrendForce expects that despite Apple’s shift from Mini LED to OLED, the shipment volume of Mini LED backlight application products will decline in 2024. However, as costs decrease, more brands are expected to adopt Mini LED, with shipments potentially reaching 75 million units by 2027.
Conclusion
Apple’s changes in the application of Micro/Mini LED reflect various considerations. However, the importance of Micro/Mini LED as a key new display technology cannot be denied. As the display industry evolves towards higher resolution, larger sizes, and miniaturization, it will inevitably require more advanced display technologies. Therefore, the LED industry continues to advance Micro/Mini LED developments.
Although the choices of terminal companies may limit short-term growth in Micro/Mini LED, they also allow the industry to calmly assess the current situation, adjust strategies, and redirect resources to key technical challenges, promoting Micro/Mini LED technologies through their early growth phase towards commercialization.
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