Apple gives up manufacturing the screens for its watches and cuts staff

2024-03-22 23:53:00

Apple Inc. is ending a long project to design and develop its own displays for smart watches, ending another costly research and development initiative.

In recent weeks, the company completed an internal effort to manufacture displays with microLED technology, according to sources with knowledge of the matter. The displays, which offered brighter and more vibrant images, would have been added to a future version of the Apple Watch, before potentially moving on to other products.

But the cost and complexity of the task turned out to be too high. So Apple is reorganizing the teams that handle display engineering and eliminating several dozen jobs in the United States and Asia, said the sources, who asked not to be identified discussing an internal matter.

The closure of the project coincided with the decision to cancel work on an autonomous vehicle. In both cases, Apple is giving at least some of the affected employees the opportunity to find other roles within the company.

If they do not find a new job – which is likely for some of them – the workers will be fired and receive compensation. An Apple spokesperson declined to comment.

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The display project was part of a broader initiative by Apple to design more technology in-house. Although the company already customized the displays in its products, they relied heavily on designs from partners such as LG Display Co. and Samsung SDI Co. By bringing more of that process to Apple, the company hoped to gain an advantage over its competitors.

He also saw a promising future in microLED, made up of millions of microscopic light-emitting diodes, and wanted to play a key role in its development. This technology consumes less energy, reproduces colors more accurately and allows for thinner devices.

The project began about seven years ago within Apple’s hardware engineering organization. It was later taken over by Wei Chen, who heads Apple’s display group. The project, codenamed T159, was moved to Apple’s hardware technologies division a few years ago.

Apple even built its own display manufacturing plant in Santa Clara, California, near its Cupertino headquarters, where hundreds of employees could test production of microLED displays. Many of the job cuts affect people at that center, along with Apple’s display engineering centers in Asia, near the company’s supply chain centers.

A visit to the Santa Clara facility this week showed the building was still operational, with cars in the parking lot and a small number of employees entering and leaving the facility.

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When Apple came up with the microLED project years ago, it saw this technology as a successor to the current standard: organic LED or OLED displays. It hoped to introduce microLEDs to all of its products, from Apple Watches to iPhones and Macs.

In 2018, the company believed it was capable of bringing displays to the Apple Watch as early as 2020. That timeline ended up being pushed back to 2024, and then to 2025 and beyond. The situation was similar to Apple’s work on the electric car, the launch of which was postponed several times.

Despite all their advantages, microLED displays were difficult to produce in sufficient quantities. Making them required cutting-edge technology and a complicated process called LED transfer, or the placement of pixels on the screen. Although Apple owned the design and manufacturing process for microLED displays, it used several partners to handle mass production and tasks such as LED transfers.

News of a change to the project first emerged in recent weeks, when suppliers announced that they were losing contracts related to microLEDs. Among them, AMS-Osram AG, which reported that the cancellation would force it to cut jobs, potentially sell a manufacturing plant and record a loss in value that could approach $1 billion.

For now, Apple believes OLED is the best solution for its smartwatch. However, Apple continues to consider microLED for other projects in the future. The company is identifying potential new vendors and processes that could make the technology a reality in its devices, although that’s not likely to happen anytime soon.