New-Look iPhone? JPMorgan On The Smartphone Display Evolution

JPMorgan’s Narci Chang said that Apple Inc. AAPL may be considering a move towards an out-cell touch structure for the OLED iPhone in 2017. He believes that Apple would adopt a structure similar to the film-based out-cell solution Samsung used for its Galaxy S Edge. TPK may be among the main suppliers for the out-cell module for Apple.

Flexible/curved OLED panels do not have an encapsulation glass, which makes it impossible to apply an on-cell touch panel. “Samsung used a film-based out-cell solution that adds an additional layer of touch sensor film on top of the display. We believe it is highly likely Apple will adopt a similar out-cell structure,” analyst Narci Chang wrote.

Touch Panel Industry: Now More Consolidated

Chang expects OLED iPhone touch to reach 10 percent of TPK’s revenue in 2017 and to 14 percent in 2018. Gross profit would be higher, at 17 percent and 21 percent in 2017 and 2018, since TPK is likely to be involved with “both sensor patterning and lamination for the model, in contrast with iPad where TPK only did lower-margin lamination work.”

The analyst added that gross margin could be as high as 15 percent, versus around 10 percent for iPad touch.

“After years of a blood bath of price competition among touch panel makers, the industry is now more consolidated with only a few scalable players left for film based touch panels - TPK, GIS, Nissha, ALPS, and O-film,” Chang commented. He added that there is unlikely to be any cutthroat price competition over the next 2-3 years.