No surprise: Samsung Display blamed for iPhone 8 pricing above $1,000
When it comes to Apple’s products, we know that the company typically prices its offerings above the market average in return for a certain level of “quality.”
That level of quality may be costing Infinite Loop quite a bit this year with the iPhone 8/X/Edition. New components tasked with scanning eyes and faces and such have added expenses to the hardware and software R&D process. In fact, an optical Touch ID fingerprint sensor that was to be embedded under the phone’s display was reportedly scrapped. KGI Securities’s Apple analyst, Ming-chi Kuo, claims that internal testing has yielded unsatisfactory authentication rates, especially when passing through an OLED display.
Speak of the devil, the iPhone 8 cost driver with the largest profile by far has got to be the new super-colorful and vibrant OLED display.
Samsung, which still controls about 95 percent of the market for mobile OLED displays, is said to be responsible for providing for the device. That crushing competitive advantage may be why the chaebol is commanding beaucoup bucks from Apple. How much? Kuo thinks the range is between $120 and $130 per unit, a contrast from $45-55 for LCD units that will likely be on two more conventional-looking iPhone models this fall.
Apple has been dropping cash piles on competing operations in order to juice up OLED production with new factories. Cupertino imposes strict quality standards and yield requirements with regards to components and it seems that no manufacturer other than Samsung has met those bars at this point. In fact, Bloomberg reports that a potential alternative company, LG Display, indicated to Apple that it won’t greenlight OLED deliveries before late 2018. Part of the reason why? Samsung effectively clamped down on foundry machines before LG or anyone else could — and machine suppliers need a good deal of time to make more of them.
Furthermore, Samsung doesn’t just provide the actual LEDs itself, but a touch panel and control module — three parts of the entire OLED display stack. The only thing it won’t be shipping is the 3D Touch panel.
All of this isn’t really new “news,” as industrial backchannels have been buzzing for many months about all aspects of the mobile OLED production business — with Samsung in its advanced position from all the legacy LCD-makers, getting up to par may be one of exponential progress, but it will still be painfully slow from square one. We just haven’t taken more than a few steps from that square.
It’s strongly believed that these factors will lead to a $999 starting price for the iPhone 8. Will these new features attract enough buyers to make the model a sustainable venture when there’s a psychological barrier to break down in what may be a four-digit price in the US? When consumers start comparing a phone to a MacBook? Samsung Display may be aiding, adding to the prestige which Apple has always profited off of. The chaebol could also end up doing something rare when it comes to talk about Infinite Loop: put it at mercy.
Apple is expected to debut the new iPhones on September 12.