The escalating conflict between the United States and China regarding national security issues may soon compel Apple to sever connections with one of its Chinese display suppliers. John Moolenaar (R-MI), the chairman of the House Select Committee on the Chinese Communist Party, has reached out to Defense Secretary Lloyd Austin, expressing concerns over Chinese state-subsidized LCD and OLED manufacturers and the potential risks they pose to U.S. national security.
As outlined in the letter, certain Chinese companies, including BOE Technology Group and Tianma Microelectronics Co., receive subsidies from the CCP and are believed to be closely linked to the Chinese military, known as the People’s Liberation Army.
Due to the significant role of LCD and OLED panels in U.S. weapon systems, Moolenaar is apprehensive about the implications of BOE and Tianma on the U.S. military supply chain, which could culminate in a national security dilemma. He is also urging the Pentagon to designate BOE and Tianma as Chinese military enterprises and to add them to a blacklist.
A segment of Moolenaar’s letter states:
“The PRC engages in aggressive state-sponsored subsidization of the two primary display technologies: liquid crystal display (LCD) and organic light-emitting diode (OLED) display. By doing so, it drives non-PRC companies from the market and bolsters PRC dominance of the industry. In LCD, the industry’s legacy technology, the PRC’s share of global production capacity has grown from 0% in 2004 to 72% today, and non-PRC manufacturers are rapidly exiting the market due to their inability to compete… A similar evolution is now underway in OLED, the current generation of display technology; the PRC’s share of global production capacity has grown from 1% in 2014 to 51% today.”
While Samsung and LG provide the majority of displays for Apple’s latest iPhone models, reports indicate that Apple is in negotiations with BOE Technology for OLED panels for the anticipated iPhone SE 4. BOE Technology has reportedly outbid Samsung, securing a position in Apple’s supply chain.
The growing pressure to relocate production to the U.S. has already prompted Apple and TSMC to begin manufacturing A16 processors in Arizona. The critical decision regarding the continuation of BOE Technology for the iPhone SE 4 supply chain could have profound implications for Apple’s operations. As the phone is scheduled to enter mass production in October, Apple may face significant time constraints in identifying an alternative supplier.
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