OLED Displays in Next iPhone Will Cost Apple $50M in Q2: Analyst

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Apple’s next-generation – and 10th anniversary – iPhone will feature an OLED display, voices are whispering from all around. But that would cost Apple an additional $50 million in the March quarter, an analyst says loudly.

In a memo sent to investors and obtained by AppleInsider, Cowen & Company’s Timothy Arcuri says Apple’s gross margins will remain flat quarter-to-quarter at 38.8%, but that adopting OLED would be a “pinch point.” OLED brings certain advantages over LCD, such as lower power consumption, deeper black, and flexibility, but it is often more expensive, and what may be a major issue for Apple is that not all suppliers are equipped with the technology to supply components on the scale Apple needs.

As we previously reported, Apple’s display manufacturers are preparing to support the company’s OLED display needs but may not be able to commit to Apple as early as this year.

That’s likely why rumours have been suggesting that Apple’s exclusive OLED display supplier could be Samsung, which has been a pioneer of curved OLED displays and deployed them with its Galaxy Edge models.

And as Apple will report its holiday quarter earnings tomorrow, Arcuri has looked into his crystal ball and expects the company to report the sale of 76 million iPhones, a roughly flat number year-over-year, but which may be in line with other analyst expectations.

The analyst also predicts 13.5 million iPads and 5.4 million Apple Watches. It is worth adding that IDC anticipated the shipment of 1.1 million Watches for the third quarter of 2016, so Arcuri’s prediction seems to be highly positive on Apple Watch Series 2 sales.