Apple Hires a New High Powered Leader in AMOLEDs
Apple Inc’s. (AAPL) stock price has been under enormous pressure over the past 6-months and is now trading in the 440s after reaching a high of 705 in October 2012 as shown in Figure 1. The 52- week range is 435.00 - 705.07. Every analyst covering the stock has explanations for what caused the drop and forecast that the future will be better or possibly worse as they attempt to predict what Apple is planning to do in response to the recent price collapse. Perhaps the best explanation is the recent drop in gross margin and the lack of a revolutionary new product on the drawing board.
Figure 1 AAPL Stock Price – 1 year
Apple, the manufacturer of the world's first multi-touch enabled smart phone and the highest-satisfaction, and best-selling tablet -- is persistently rumored to be releasing an Apple-branded television or entering the home entertainment market with a product competing with game consoles. Some of the stories are fantasies, but many of them claim evidence like insider reports from assemblers, reports of testing, or information from screen suppliers. Apple doesn't make a game console per se, but software developers have commented repeatedly on the strength of Apple's phones and tablets (and mini-tablets) as game console substitutes. Success with iOS devices as portable game-machines, and developers' attention to iOS for game development, has positioned Apple to evolve its product line to include a living-room game console. What risk do competitors really face from Apple in the living room? The world doesn’t need another prognosticator but we can comment on Apple’s recent hire, Jueng –jil (James) Lee--a former Research fellow from LG Display and a senior person in LG Display’s R&D effort to create a printed AMOLED TV. Prior to joining LG Display, Dr. Lee was responsible for development at Cambridge Display Technology (CDT, now Sumitomo), the leading developer of solution-based polymer based OLED material. Dr. Lee is a part of the CTO’s organization and will draw on resources from Apple’s display group. He is no doubt more knowledgeable about OLEDs that any of Apple’s current staff, which is known to be quite strong.
It is noteworthy that the LCD TV market has been struggling in the last 2-years and is suffering from slow growth after 35% to 45% advances in the preceding 3 years as shown in Figure 2. The slow growth in LCDs is more significant when considering the virtual elimination of LCD competitors’, plasma, rear projection and CRTs, which in 2011 had a cumulative 16%+ share and is now down to <7%. Expectations that 3D, smart TVs, new sizes and 4K would jump start another round of growth has been overly optimistic. The display industry needs a new growth leader to spur the increase in equipment utilization and Apple desperately needs a new product that can rival the revenue growth of the smartphone and the tablet. So perhaps, the wonders of OLEDs combined with the creativity of Apple’s new user interface with spur growth for both entities.
Figure 2 LCD TV Panel Shipments (000)