There is speculation that Samsung Electro-Mechanics may supply Apple with lens for cameras on the iPhone __ but what are some of the preconditions for this to happen?
There seems to be three obstacles, at least.
Samsung Electro-Mechanics’ lens production capacity currently stands at around 10 million units per month, according to people familiar with the matter. But Apple requires from its suppliers its own dedicated factory line with production capacity in the tens of millions of units. Sadly, the South Korean component maker’s current capacity doesn’t even come close.
It’s because Samsung Electro-Mechanics had no incentive to expand its factory line so far. Production capacity was kept low to protect is proprietary technology. It is the same reason why Samsung Electronics’ mobile business makes its own camera modules, instead of using contract makers.
Samsung Electro-Mechanics will need to invest at least 100 billion won to expand its factory lines to enter Apple’s lens supply chain. If the company announces in the future that it was planning newly invest 100 billion won into its facilities, it will be a sure line that it is planning to supply to Cupertino.
2. Samsung Electronics
Samsung Electronics, Samsung Electro-Mechanics’ sister firm and arguably its biggest client, will be none too pleased with the potential Apple deal. Samsung Electronics is touting the periscope optical zoom (or “folded zoom”) feature on the cameras of its Galaxy smartphones as an edge over the iPhone. It uses a prism to bend the light sent to the image sensor. Samsung Electro-Mechanics have been producing folded zoom since last year.
Apple is planing to apply folded zoom to its iPhones in 2022 __ but its current suppliers such as LG InnoTek has yet to announced that have developed such technology. O’Film Group announced that it has developed the technology last month but the Chinese firm was included in US government’s new list of companies that will be sanctioned over human rights violations of Uighur Muslims. This gives an opening for Samsung Electro-Mechanics, and a direct threat to Samsung Electronics.
3. Largan Precision and rivals
On the other hand, Apple will need to sort things out with Largan Precision. The Taiwanese company is the world’s largest lens maker, with a production capacity of 190 million units per month. Compatriot GSEO is also an Apple supplier, but Largan takes the lion’s share of supply. Apple is a “big buyer” but Largan is also a “big supplier.” The lens maker has considerable leverage and won’t welcome Samsung Electro-Mechanics joining the supply chain.
Sunny Optical is also being mentioned as a possible lens supplier for Apple. The Chinese company has a production capacity of 150 million lens per month __ it also have supplied folded zoom tech to Huawei before. But the escalating tit-for-tat between the US and China will likely give Apple pause. Cupertino is already planning to move some of its supply chain in China to other regions. Sunny’s folded zoom is also behind Samsung’s in quality, according to people familiar with the matter.
Despite these obstacles, if Apple decides to launch folded zoom-armed iPhones early and LG InnoTek fails to develop the technology in time, Samsung Electro-Mechanics becomes the No.1 candidate to supply the needed lens. Apple has folded zoom patents, but they uses mirrors to bend the light, which could either be lesser in terms of technology sophistication to the prism method or violate patents of Corephotonics, which was acquired by Samsung Electronics last year.