APPLE STOCK

What the report really means (probably).


A Bloomberg report about Apple custom displays is leading to some interesting takes on it. Like Apple is moving into the manufacturing business, or that the company doesn’t already use custom-designed displays.

Neither of these things is true, so I think it’s worth taking a look about what the report did and didn’t say – and what the implications are likely to be …

What the Bloomberg report didn’t say

First – and in contrast to some reports – there is nothing there about Apple making its own displays. Apple is not in the component-manufacturing business, and isn’t about to set up its own factories and start hiring its own assembly-line workers.

Second, while the report does say that Apple will be using “custom” displays, this in itself isn’t new: The company already does this.

iPhone displays, for example, are not off-the-shelf display panels which Samsung has sitting in its warehouses waiting for Apple to buy. Instead, Apple gives suppliers like Samsung a complete spec – which they have sometimes struggled to manufacture. Suppliers then set up exclusive production lines which are solely for the production of these displays.

So what is changing?

It is useful to start by considering the context provided in the report.

The changes are part of a sweeping effort to replace Apple supplies with homegrown parts, an undertaking that will give the company more control over the design and capabilities of its products. The tech giant has dropped Intel Corp. chips in its Mac computers in favor of in-house designs and plans to do the same with the key wireless components in its iPhones.

Both are examples of Apple bringing in-house the design of components, while still outsourcing the manufacturing of them.

The report expects the same thing to happen with Apple’s custom-designed displays.

Although Apple has designed the new displays and devised their manufacturing process, it will likely rely on an outside supplier to handle mass production.

So, back to the question of what is changing. My reading is this…

First, Apple is getting much more deeply involved in the design of the displays. Instead of essentially telling Samsung to “provide a display which has these features and meets these specs,” Apple is now designing the entire display from the ground up. Essentially, it’s approaching it in the same way it does Apple A-series and M-series chips, where every single aspect of the design is created by Apple.

Second, in addition to the design of the displays themselves, Apple is also determining the manufacturing processes to be used, having tested these in its own facilities.

The company operates a 62,000-square-foot facility in Santa Clara, California — about 15 minutes away from its Apple Park headquarters — where it conducts test manufacturing of the screens. It has a similar research and development campus in Taiwan.

The actual mass-production would still be carried out by Samsung, LG, and other display partners.

Apple custom displays should be great news!

Essentially, it will be Apple figuring out what is technically possible – not its suppliers. Before the M-series chips, no existing CPU manufacturer could get anywhere close to the combination of performance and battery life offered by Apple’s current Macs. If Apple had asked Intel (and we’re sure it did), it would have been told it was impossible.

Apple instead took the approach made famous by Steve Jobs: Hiring great people, then telling them “Here’s what we want, don’t tell us it’s impossible, figure out how to make it happen.” The result was by far the best computer chips we’ve ever seen.

Now the same will be happening with displays. Apple will be starting with a blank sheet of paper, deciding what features it wants its displays to have (seemingly impossible goals included), then figuring out how to make them happen.

Nor will it be allowing its manufacturing partners to turn around and declare that actually manufacturing such displays isn’t possible. It sounds to me like Apple will be proving that it’s possible by designing the necessary production processes, and then carrying out enough test manufacturing to iron out the kinks.

The result should be displays which go significantly beyond anything currently available on the market – potentially offering as great a leap over current displays as M-series chips did over Intel ones.

I can’t wait to see the results.

Image: Mi concept

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Naveen Kumar

Friendly communicator. Music maven. Explorer. Pop culture trailblazer. Social media practitioner.

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