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iPad Pro will be Apple’s first Mini LED device, says Kuo

Apple’s plans to integrate Mini LED displays into its various product lines continue to see disruption from an unstable supply chain, with TF Securities analyst Ming-Chi Kuo predicting that the iPad Pro will be the first to take advantage of the technology.

In a note to investors on Wednesday, Kuo said he believes the iPad Pro will be the first Apple device to have a Mini LED display. It was previously speculated that the distinction would go to a renewed MacBook Pro or iMac.

Suppliers are preparing to die for production in the fourth quarter of 2020, the analyst said, although recent inspections in the supply chain show revised estimates for shipping volumes of between 300,000 and 400,000 units. Down 50% from previous forecasts, the reduced production is said to be a result of problems related to the production of display module materials.

With limited resources as a backdrop, it looks like Apple is leveraging its huge market power to diversify its nascent Mini LED supply chain. Epistar remains a primary partner, and the company has developed a proprietary production optimization system while working with the technology giant, Kuo said.

“Apple is the global consumer electronics brand with the highest bargaining power over suppliers,” writes Kuo. “To find new suppliers, and reduce supply risk and cost, we believe that Apple leads the design of most parts and owns related patents. Mini LED matrices are no exception.”

Epistar’s patented process is seen by some as a barrier to entry for potential secondary suppliers such as Sanan Optoelectronics, Osram and Seoul Semiconductor, but Kuo disagrees. In an earlier note, the analyst said Sanan could enter Apple’s supply chain as soon as the first half of 2021.

With Sanan in the mix, Apple’s Mini LED daycare costs are expected to fall by around 50% from year to year in 2021, and 35% from year to year in 2022, according to today’s note.

Kuo further expects a “hard price war” between Apple and non-Mini Mini LED chip manufacturers to start as the first product roll of the line this year.

“We believe that China’s industrial chain (including monitors and upstream LED chips) will start a price war and gain a leading position in the mini-LED market,” writes Kuo. “The price war benefit comes from lower production costs, economies of scale and government subsidies.”

A relatively new backlight technology, Mini LED door, positions thousands of LEDs behind an LCD screen to offer better local dimming, color reproduction and contrast ratio than conventional LED backlit screens. Apple is expected to rely on the technology for at least five years before moving on to more exotic solutions such as micro-LEDs.

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