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LG unlikely to enter iPhone OLED supply chain before 2019

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Following revelations that Samsung could be the sole supplier of OLED displays for a next-generation "iPhone 8" handset, a report late Wednesday reaffirms previous claims that Apple's effort to diversify its supply chain with panels from LG is unlikely to bear fruit before 2019.

Citing people with knowledge of the matter, Bloomberg reports LG is looking to reach full OLED production capacity in 2019, with small batches potentially available at the end of 2018. The Korean company is in final stage talks with Apple over component pricing and other details as it continues to deal with hurdles toward manufacturing ramp.

LG, one of the world's few OLED producers, currently supplies Apple with OLED displays for Apple Watch. In fact, it was the tech giant's sole supplier until Samsung entered the fray in late 2015.

More recently, however, LG has run into problems related to the manufacture of larger OLED panels suitable for smartphones like iPhone. In particular, the company only recently procured evaporation equipment, tools that are key to the production process.

The report likely refers to vapor deposition machines built by Canon Tokki, a small arm of Japanese imaging giant Canon. Called ELVESS OLED, these specialized systems use a patented camera tracking mechanism to lay down pixels with an extremely narrow margin of error.

A report last year estimated that almost all OLED panels in circulation are manufactured using ELVESS machines, including components built by major producers Samsung, LG and Sharp.

Despite doubling production in 2016, Canon Tokki builds less than ten units per year, leading to a backlog of orders. According to today's report, Samsung's display branch beat LG to ordering several machines, putting the latter at a distinct disadvantage. LG took receipt of its allotment this year, and is currently working to ramp up production to adequate levels.

To help accelerate the process, LG invested $7 billion in expanding production at its OLED factory in China.

Today's report jibes with rumors that Apple put some $2.7 billion toward LG's manufacturing efforts, a sum said to be in part earmarked as an advance payment for OLED supply due for delivery in 2019.

In the interim, well-connected analyst Ming-Chi Kuo says Apple will have to rely on Samsung for OLED panels bound for "iPhone 8," and potentially future smartphone models to be released next year.