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The Apple Inc. Foray Into MicroLED Is More Bark Than Bite

James Brumley

Once again, unconfirmed (though credible) rumors about Apple Inc. (NASDAQ:AAPL) working on a cutting-edge technology has made for splashy headlines. And, though the news didn’t actually push Apple stock higher, it’s another accolade that bolsters the bullish case for AAPL.

The latest buzz? The iPhone maker is working on the in-house development of its own MicroLED screens, which are superior to the commonly used LED screens that are popular and affordable. These screens are said to be even better than the OLED screens the company used — for the first time ever — with the iPhone X launched late last year as well as in its newer smart watches.

A reason to buy Apple stock if you don’t own it already? Not in the least. In fact, it’s arguably a solution aimed at a problem that doesn’t really exist — at least not in a way consumers care about or understand.

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It’s another trophy technology in Apple’s trophy case, though. In that regard, at the very least, the development of its own MicroLED screens is another advancement the company can tout.

Introducing MicroLED Technology

Bloomberg broke the news late this weekend, only citing “people familiar with the situation.” It’s not a stretch to accept it as fact, though. In 2014, Apple acquired a company called LuxVue, which was almost entirely focused on the development of power-efficient MicroLED screens.

The technology is exactly what it seems like it would be — an LED (light-emitting diode) screen with even smaller diodes that not only save room and energy, but provide a higher-quality image.

Bonus: While the image quality of a MicroLED screen is just about as perfect as anything but the actual thing, MicroLED screens don’t run the risk of “burn in” that OLED’s run.

Yes, this could prove disruptive to screen makers like Samsung Electronics Co Ltd (OTCMKTS:SSNLF) and LG Display Co Ltd. (ADR) (NYSE:LPL). The former made the OLED screens used in the iPhone X, and the latter was rumored to soon become a phone screen supplier for Apple.

The advent of MicroLED or Apple’s foray into the fray is neither surprising nor inevitable. It’s not even that novel, considering that in January Samsung unveiled a 146-inch television screen that used MicroLEDs.

Still, to the extent a custom-built piece of technology translates into a better consumer experience that a company can create from the ground up, designing its own screens is a step forward for the company.

In the past, Apple has simply used off-the-shelf hardware made by third parties, and then adapted their designs and circuitry for the ideal outcome. By bringing the design work in-house, Apple can create the optimal collection of hardware and the software that powers it.

It’s unlikely that Apple would choose to mass-produce whatever it comes up with, if it even comes up with a MicroLED screen that’s functional and affordable. Most likely it would outsource the production of the new screens.

Whenever they become available to the masses, the word is that its smart watches will be the first beneficiaries. Putting the technology in smartphones and tablets will likely come later, when the technology has been refined and becomes cheaper.

Bottom Line for Apple Stock

Again, there’s a reason Apple stock didn’t dish out an advance in the wake of the news. Even the most dedicated of Apple shareholders realize it will take at least a couple of years before MicroLED screens are found in Apple’s products available to the public. It may take even longer than that to put them in iPhones.

As Dongbu Securities analyst S.R. Kwon put it:

“It is not clear whether MicroLED will be better than the OLED displays Apple uses for its smartwatches. At this point, this seems to me that Apple wants to show off – it’s more of… look what we can do rather than a realistic alternative.”

Still, there’s a lot of publicity power in demonstrating a new technology, particularly when you’re Apple. If Apple can be the first outfit to put this technology in a handheld or a wearable, it may well extend the revenue potential of an iPhone lineup that consumers are increasingly ho-hum about.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.

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