Taiwan Surface Mounting Technology (SMT) is currently the only provider of SMT services for Apple's miniLED backlighting applications, but China-based Luxshare Precision Industry is expected to become a second provider in fourth-quarter 2021 at the earliest, according to industry sources.
Apple has launched miniLED-backlit 12.9-inch iPad Pro and is likely to introduce miniLED-backlit MacBook Pro in fourth-quarter 2021, the sources said.
For miniLED backlighting, it is difficult to control SMT process to reach required yield rates, and therefore few SMT service providers other than Taiwan SMT are willing to invest to compete for Apple orders, the sources explained. However, Apple is necessary to have a second provider of SMT services to reduce supply risks, the sources said.
In order to compete for Apple's orders, Luxshare has set up at least 6-7 SMT production lines for miniLED backlighting, the sources noted. However, Luxshare will face the challenge of reaching required yield rates, for SMT services are used to integrate various devices and components onto miniLED backlight units (BLUs), the sources indicated. Taiwan SMT's yield rates for SMT services used in miniLED backlighting of 12.9-inch iPad Pro stand at 90-95% at present, the sources added.
Luxshare stands a chance of sharing 10-15% of Apple's orders for SMT services used in miniLED backlighting in the fourth quarter of 2021 and its share may rise to nearly 50% in the second or third quarter of 2022, the sources said. However, whether Luxshare can share the orders hinges on its actual yield rates, the sources noted.
For miniLED chips used in backlighting, Taiwan-based Epistar was originally the exclusive supplier but Apple has added Germany-based Osram Opto Semiconductors as a second supplier, the sources indicated.
Epistar has fully utilized its miniLED chip production capacity and Osram's reserve production capacity is quite limited. But Apple's demand for miniLED backlighting is fast growing, and China-based Sanan Optoelectronics will become a third supplier of miniLED chips for Apple beginning the first half of 2022, the sources noted, adding that Sanan has obtained certification for miniLED chips from Apple.
Sanan will soon kick off production at its newly established mini/microLED chip production base in central China, with Samsung Electronics and China-based vendors to be major clients, the sources said.
Apple added 12 China-based makers to its supply chain in 2020, which reflects Apple's increasing reliance on China-based supply chain makers to keep decreasing production cost and maintain its market status in China, the sources indicated.