In a surprising twist affecting the tech industry, a second supplier for Apple has announced a significant setback with the cancellation of a substantial micro LED project. The project, speculated to involve micro LED displays for the upcoming Apple Watch Ultra 3, has been halted abruptly. This cancellation follows closely on the heels of a similar announcement from ams Osram, which saw its shares plummet by 40% due to the news.
Kulicke & Soffa, the latest supplier to face the fallout, has not directly named Apple in their statement. However, industry speculation strongly suggests Apple as the intended client for the now-cancelled micro LED project. The disclosure, shared by display analyst Ross Young via Twitter/X, details the financial impact on Kulicke & Soffa, with expected pre-tax charges ranging between $110 million and $130 million related to the cancellation.
Described internally as "Project W," Kulicke & Soffa's engagement was poised to support a strategic customer with the development and anticipated mass production of advanced display technologies. The abrupt project cancellation comes as part of the customer's strategic business review, leaving Kulicke & Soffa to navigate the financial and operational repercussions. The supplier now anticipates the wind-down activities to extend through the end of fiscal year 2024, including up to $53 million in inventory write-down charges.
The setback highlights the broader challenges faced by Apple and its suppliers in innovating with micro LED technology. Despite its advantages over OLED in terms of color quality, brightness, and power efficiency, the high costs of micro LED production have proven to be a significant hurdle. This economic imbalance has reportedly forced Apple to reconsider its timeline for the Apple Watch Ultra 3, with expectations now set for a possible launch in 2027.
This development not only underscores the technical and financial challenges of adopting new display technologies but also hints at potential delays in product releases. As Apple suppliers grapple with the consequences of the cancelled project, the industry awaits further clarity on the future of micro LED technology in Apple's product lineup.
