The cost and technological challenges brought by silicon-based OLED microdisplays required for creating immersive experiences have posed difficulties for Apple, as the main supplier Sony has doubts about the prospects of MR headsets and refuses to expand production. Samsung Display, LG Display, and China's Visionox all want to secure the subsequent production rights for this "most expensive component" of the Vision Pro.
On Friday, July 7th, the latest news revealed that although the specific release date for Apple's first mixed reality headset, Vision Pro, has not been set, Apple plans to promote this new product in major cities in the United States, such as New York and Los Angeles, in early 2024. Consumers will need to make appointments to purchase this product, which may increase the difficulty of purchasing this high-priced product, priced at $3,500.
After a 0.8% decline, Apple's stock price rebounded by 0.3%, reaching a new historical high at the end of June, with a market value exceeding $3 trillion.
An article from Wall Street News a month ago mentioned that after the WWDC Worldwide Developers Conference, due to the high price, complex design, production difficulties, and capacity limitations of major suppliers, Apple has significantly reduced the sales target for the first year of this device to 150,000 units, far below the initial target of 1 million units, not to mention the ambitious goal of selling 3 million units in the first year.
Reports this week suggested that Apple's production of Vision Pro in 2024 may be less than 400,000 units, mainly due to the limited production capacity of "certain components," which can only equip 130,000 to 150,000 units in the first year. Among them, silicon-based OLED micro-displays are one of the biggest bottlenecks.
According to insiders involved in the production process of Vision Pro, Apple's mixed reality headset faces a headache-inducing problem: the silicon-based OLED micro-display required for a truly immersive experience brings cost and technological challenges. It is the most expensive component of the entire device, with a total cost of around $700, accounting for almost half of the manufacturing cost.
Some analysis even suggests that the high material costs and exaggerated technical difficulties will make it difficult for Apple to make any money from the first-generation MR headset. The company even planned to sell at a loss to promote the popularity of this type of product, but eventually settled on a price above $3,000 (approximately RMB 25,000), barely breaking even with the cost.
These two silicon-based OLED micro-displays (Micro OLED) are only 1.42 inches in size, about the size of a postage stamp, with a resolution of 3648×3144 and a pixel density of 3391ppi, which is six times higher than that of glass-based OLED displays and higher than the resolution of the most advanced 4K TVs per eye. The module's brightness can reach up to 6000 nits. Apple's first-generation Vision Pro silicon-based OLED micro-display is manufactured by Sony, which began developing the display technology in 2009, laying the foundation for later Micro OLED. Initially, it was used in camera electronic viewfinders. The substrate on which the organic light-emitting diodes (OLED) are deposited is produced by TSMC using silicon wafers. Compared to the glass or plastic substrates of traditional OLEDs, the silicon substrate helps achieve higher resolution and smaller size, making it widely applicable in augmented reality, virtual reality, and other display devices.
According to recent reports, the high cost of silicon wafers, the challenge of product damage due to the inclusion of tiny dust particles during the manufacturing process, and the fact that no company has started mass production have all led to the high cost of the OLED micro-displays relied upon by Vision Pro.
Wall Street News previously mentioned that although the niche market nature will limit the sales expectations of Apple's first-generation mixed reality headsets, in reality, the shipment volume of Vision Pro is being "choked" by Sony. In mid-June, Sony set the production capacity limit of silicon-based OLED micro-displays at 900,000 units per year, which can supply no more than 450,000 units of Vision Pro, rejecting Apple's request to expand production capacity.
This is likely mainly due to Sony's doubts about the future market growth prospects of mixed reality headsets, so they are unwilling to rashly increase the production volume of the aforementioned key components, although analysts believe that Sony actually has the ability to significantly expand production.
Shoji Shizumi, head of Sony's semiconductor division, admitted last week that the company will pay attention to how much demand there will be for OLED micro-displays: "We will not aggressively produce this type of display, (we will not) increase its production scale to be the same as the image sensors provided for smartphone cameras."
Furthermore, insiders revealed that given Sony's "reluctance," South Korean competitors Samsung Display and LG Display may surpass Sony and become the leading suppliers of OLED micro-displays for future generations of Vision Pro and its subsequent products.
Samsung Display acquired American OLED micro-display manufacturer eMagin for $218 million in May this year and is currently building a manufacturing facility in South Korea, with trial production expected to begin next year. LG Display, which produces external OLED displays for the first-generation Vision Pro, showcased its self-developed micro OLED prototype samples in January. Both companies may collaborate with Apple on more affordable consumer-grade mixed reality headsets.
China's Visionox Technology, established in 2016, reportedly sent multiple prototype products of OLED micro-displays to Apple. Apple has dispatched employees to collaborate with Visionox Technology and provide feedback on the samples. However, two individuals familiar with the process stated that no display manufacturer can currently meet Apple's expectations for this technology due to ongoing concerns about component costs. According to Nam Sang-Uk, a researcher at the Korea Institute for Industrial Economics and Trade, all display manufacturers are facing a dilemma of whether to invest necessary resources in producing relatively niche product components due to intense market competition in this field:
"In order to improve the yield rate of Micro OLED, Samsung and LG need to invest billions of dollars. However, this is not their top priority. Currently, their focus will still be on OLED displays for televisions, tablets, and foldable smartphones, as it is unlikely that mixed reality headsets will be sold in large quantities anytime soon."
Previously, it was reported that some supply chain sources believed that MR headsets could be the most complex product ever produced by Apple, with an estimated initial annual production capacity of less than 500,000 units. Due to the complexity of the process, the yield rate of early production is only 1/5:
The curved front glass on the headset is more fragile than the flat glass used on Apple's devices, requiring engineers to make repeated adjustments. Additionally, because it needs to fit the curved shell, Apple has also made the motherboard curved. It is very difficult for workers to assemble the lightweight frame that needs to accommodate lenses, displays, dense electronic components, and carbon fiber reinforcements.
In the current field of OLED microdisplays, as introduced by WitsView, with the release of Apple's Vision Pro, its Micro OLED display technology has also caught the attention of more people. In fact, global Micro OLED display manufacturers have been working in this field for many years. In recent years, Chinese manufacturers have been particularly active in this area.
As mentioned earlier, Visionox, which actively contacted Apple, focuses on the research and production of 12-inch wafer-based silicon OLED microdisplay components. On August 25th last year, DJI released the world's first consumer-grade FPV goggles, Goggles 2, which adopted a 0.49" 1920x1080 Micro OLED microdisplay screen developed and produced by Visionox.