Foxconn appears to be taking full advantage of its acquisition of Sharp as the display maker is reported to be setting up an OLED production line at an iPhone assembly factory. All of the OLED production there is said to be destined for upcoming iPhone models, according to a Nikkei report cited by Digitimes.

Sharp plans to invest JPY100 billion (US$864 million) to set up an OLED production line at Foxconn Electronics’ factory in Zhengzhou City, northern China.

However, the facility won’t be ready for this year’s iPhones, as trial production is not expected to begin until 2018 or 2019 – though the company may be making OLED units for the iPhone 8 elsewhere …

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Back in September, Apple was reported to be negotiating with Sharp to supply OLED panels this year for the iPhone 8. Sharp’s CEO last year suggested that Apple would limit OLED to a single model of the iPhone 8, echoing earlier reports.

Apple had no shortage of potential suppliers for OLED screens. Samsung currently accounts for around 95% of the market, but LG is also gearing-up for volume production as Japan Display uses funds from a government bailout to boost its own OLED production plans.

Apple currently uses OLED only for the Apple Watch, but is expected to introduce the technology on a top-tier iPhone this year, expanding to all models later. The company is also testing OLED for MacBook screens.

OLED is expensive to manufacture, but offers a number of benefits, including slimmer form factor, better power efficiency, darker blacks and more vivid colors.

Foxconn is also investing heavily in automation, aiming to move from automated production lines to fully-automated factories.

A separate Digitimes report last week suggested that Apple would be switching from a-Si LCD panels on the MacBook Pro to Sharp IGZO (Indium, Gallium, Zinc and Oxygen) ones from the middle of the year. These offer sharper displays and greater power efficiency.

Image: FT