[News] Why Apple “Unexpectedly Cancels” Micro LED Watch Project?

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On February 28th, as per the ams OSRAM’s press release, it has announced the unexpected cancellation of its Micro LED key project. The company will reevaluate its related strategies and provide initial estimates of the impact on its mid-term operations.

As ams OSRAM announced the unexpected cancellation of its key Micro LED project, it has prompted the company to reevaluate its Micro LED development strategy, as per TechNews’ report, speculation has arisen regarding the collaboration with Apple to introduce Micro LED technology into the Apple Watch Ultra 3. The cancellation may signify the end of this collaboration.

The first Apple Watch featuring a Micro LED display was originally scheduled for release in 2026, with rumors suggesting a potential delay to 2027 or later due to high costs. However, ams Osram’s recent announcement to cancel the Micro LED project undoubtedly sends shockwaves through the industry, casting a shadow over the integration of Micro LED technology into watches or other devices.

Unexpected Cancellation of the Micro LED Project

The ams OSRAM’s press release indicates that the management board of ams OSRAM has been informed of the unexpected cancellation of its Micro LED key project. Consequently, it has decided to re-assess its Micro LED development strategy, especially concerning the 8-inch LED fab in Kulim, Malaysia.

Upon preliminary estimation, ams OSRAM anticipates recording non-cash impairment losses of EUR 600 to 900 million related to Micro LED assets and goodwill in the first quarter of 2024. Currently, ams OSRAM is engaged in discussions with relevant clients.

This implies the changes to the capitalization of ams OSRAM’s investment into Micro LED R&D and the reduced subsidies from public funding schemes. These changes will impact ams OSRAM’s operational profitability (adjusted EBIT) for the fiscal year 2024, with estimated effects ranging from EUR 30 to 50 million.

In the information disclosed, ams OSRAM did not provide detailed specifics about the Micro LED project. Further information will be closely monitored by the industry. From the perspective of the Micro LED industry, there are still technological bottlenecks to overcome, such as chip efficiency, yield rates in mass transfer, achieving full colorization, and the immaturity of supporting industries. Cost reduction has yet to be effectively achieved, which may be one of the reasons for the project’s cancellation.

Micro LED Watch Project Not Necessarily Cancelled, Opportunities for Taiwanese and Korean Manufacturers?

Nevertheless, Apple has not abandoned discussions with other chip manufacturers, implying that the Micro LED watch project may continue. Taiwan and South Korea still maintain corresponding supply chains to support this, with downstream operations involving LG Display (LGD) in backplane and module production.

TrendForce points out that Ennostar has past experience collaborating with Apple, and PlayNitride is also a leading global Micro LED manufacturer. Furthermore, PlayNitride is part of the AU Optronics Group and can provide Micro LED watch chips and backplane transfer technology.

However, for now, the termination of the collaboration between Apple and ams Osram may also prompt other manufacturers to consider the risks of engaging in new partnerships with Apple. Apart from the initial substantial investment required, once the collaboration begins, Apple will actively seek out second suppliers, which are all aspects that need careful consideration.

From the current Micro LED supply chain outlook, TrendForce indicates that Micro LED has four main applications: large displays, wearables, automotive, and near-eye displays.

Samsung leads in large displays, and there is significant market anticipation for Micro LED smartwatches. AU Optronics continues to focus on Micro LED watches, but with a lack of synchronous brand influence, overall interest and development willingness from manufacturers may decrease compared to other brands.

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(Photo credit: ams OSRAM)