Apple abandons its microLED development. Is the dream dead?

The news came as a shock on Tuesday: Apple pulled the plug on their microLED effort for the future smartwatch that was anticipated to be released by 2026. Hundreds of people working at the company’s secret facility in California were let go, and in a swift move,  their manufacturing partner, ams-Osram, was informed. Yole Group has been following the microLED industry since 2017 with its annual MicroLED report and tirelessly traveling the world to present our analyses, so we would like to take the opportunity of this groundbreaking news to reflect upon what it means for the whole industry.

In our analysis, we had potential microLED applications split into two distinct groups. For AR, Automotive, and some specialty applications (transparent displays, stretchables, etc.), we see microLED in a technology pull situation: microLED is differentiating and brings some unique characteristics that are highly desirable, so OEMs will be eager to adopt them as soon as available. For all other applications, including most consumer displays such as TVs, smartphones, … and smartwatches, OLED is already doing a great job and is continually improving. For those, microLEDs need strong champions to succeed: companies committed to making the long-term, high-intensity effort required to develop the technology, set up the supply chain, and ramp it up. One such champion was Apple. Well, no longer.

So, did Apple just kill the microLED industry? Not necessarily. Again, some future applications are in dire need of microLEDs, and there is no incumbent technology that could provide the performance required.

But where does that leave the industry?

Apple was not the only company strongly committed to microLED: AUO and a robust Taiwanese ecosystem have been actively pushing for microLED to happen. Taiwan had missed the OLED boat and microLED was the island’s chance to return to the forefront of display technologies. Now that Apple has quit, they have an open road towards making it happen. The AUO and Tag Heuer approach for a microLED smartwatch, though low volume, could open the door to the creation of a new industry and supply chain. AUO has also been very vocal about addressing the automotive market that requires many characteristics that OLED has a tough time delivering (very high brightness, ruggedness, etc.).

So no, the microLED industry is not dead, but for the time being, it has to refocus on “market pull” applications, i.e., AR, automotive, specialty displays, and luxury consumer products: in fact, any market segment where incumbent technologies have a hard time providing what is required. That being said, two questions still remain: what happens to Apple’s partner, and what happens to smartphone dreams?

As we had anticipated two years before it was formally announced, ams-Osram invested more than $1B towards a microLED fab to work with Apple. Now that Apple has pulled the plug, are they doomed?
This is a massive blow for the company which immediately announced non-cash impairment of 600 to 900 million euros. It has acquired much experience and know-how on microLED, and it is now all a matter of pivoting in terms of strategy. Although at a much smaller scale,  ams-Osram could still become “the microLED foundry” for anyone who wants to enter the market. Without Apple-scale volumes, they won’t need that giant, brand new, 200 mm, $1B Kulim fab, though. They might push forward on a smaller scale in their Regensburg fab. It won’t be easy, but there is a possible path ahead.

The final question remains: smartwatches were a way towards smartphones; Apple quitting the smartwatch, what will be the impact?

Let us remember 2017 with the iPhone X when Apple decided to switch to OLED. Apple had committed to certain volume levels to their exclusive supplier, Samsung Display. Sales did not hit targets, and Apple had to pay large fines to its partner. We believe it was a defining moment for Apple to think “we need to be independent of the display industry and develop our own solution in-house”. MicroLEDs could transform and disrupt the display industry by making the historical display makers disappear.

Our analysis has not changed since our first microLED report in 2017: the smartphone is by far the most challenging application for microLED. Yet, it was the endgame in Apple’s microLED strategy. It’s mainly about the required chip size, the transfer challenges, and so on. We believed that if it was ever to happen, only Apple was in a position to do so. But the idea was that they were supposed to work first on the low-hanging fruit, the smartwatch, and were that to become a reality, the following step would have been the smartphone. Now that the smartwatch is off the table, we do not believe that any microLED smartphone will happen for the time being unless it were to use a different, innovative form factor, and provide never-before-seen performance and functionalities, and do all that at an acceptable cost. Not something likely anytime soon.

Zine Bouhamri, PhD is Activity Manager, Imaging & Display at Yole Group. He is managing the expansion of the technical expertise and the market know-how of the company.
In addition, he actively assists and supports the development of dedicated imaging and display collection of market & technology products, as well as custom consulting projects.
Prior to Yole Group, Zine oversaw numerous R&D programs at Aledia. During more than three years, he developed strong technical expertise as well as a detailed understanding of the display industry.
Zine Bouhamri holds an Electronics Engineering Degree from the National Polytechnic Institute of Grenoble (FR), one from the Politecnico di Torino (IT), and a PhD in RF & Optoelectronics from Grenoble University (FR).

As Principal Analyst, Display at Yole Group, Eric Virey, PhD is a daily contributor to the development of LED, OLED, and display activities.
He has authored a large collection of market and technology products as well as multiple custom consulting projects on subjects including business strategy, identification of investments or acquisition targets, due diligence in buying and selling, market and technology analyses, cost modelling and technology scouting.
Thanks to his deep knowledge of the LED/OLED and display industries, Eric has spoken at more than 30 industry conferences worldwide over the last five years. He has been interviewed and quoted by leading media all over the world.
Previously, Eric has held various R&D, engineering, manufacturing and business development positions with the Fortune 500 Company Saint-Gobain, based in France and the United States.
Eric Virey holds a PhD in Optoelectronics from the National Polytechnic Institute of Grenoble.