Apple Said to Cut Jobs After Scrapping In-House Effort to Make Apple Watch Displays

Apple Inc. is winding down a long-running project to design and develop its own smartwatch displays, putting an end to another pricey research and development initiative.

In recent weeks, the company has ceased an in-house effort to create screens with microLED technology, according to people with knowledge of the matter. The displays, which featured brighter and more vibrant visuals, would have been added to a future version of the Apple Watch — before potentially going into other products.

But the cost and complexity of the effort ultimately proved too great. So Apple is now reorganizing the teams that handle display engineering and eliminating several dozen roles in the US and Asia, said the people, who asked not to be identified because the matter is private.

The move to shutter the project came around the same time as the company's decision to cancel work on a self-driving car. In both cases, Apple is giving at least some affected employees the opportunity to find other roles within the company. If they can't get new jobs — a likely scenario for some of them — the workers will be laid off and provided severance. An Apple spokesman declined to comment.

The display project was part of a broader push by Apple to design more of its technology in-house. Though the company already customizes the displays in its products, they are heavily based on designs from partners like LG Display Co. and Samsung SDI Co. By bringing more of that process inside Apple, the company hoped to gain an edge over competitors.

It also saw promise in microLED, which is made from millions of microscopic light-emitting diodes, and wanted to take a key role in developing it. The technology uses less power, reproduces colors more accurately and allows for thinner devices.

The effort kicked off about seven years ago within Apple's hardware engineering organization. It was later shifted to Wei Chen, who runs Apple's display group. The project — codenamed T159 — was relocated to Apple's hardware technologies division a few years ago.

Apple even built its own screen manufacturing facility in Santa Clara, California, near its Cupertino headquarters, where hundreds of employees could test the production of microLED screens. Many of the job cuts involve people at that site — along with Apple display engineering centers in Asia near the company's supply-chain hubs.

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

When Apple hatched the microLED plan years ago, it saw the technology as a successor to the current standard: organic LED screens, or OLEDs. It expected to eventually push microLEDs into all of its products, from Apple Watches to iPhones to Macs.

In 2018, the company believed it was capable of bringing the screens to the Apple Watch as early as 2020. That timeline ended up getting delayed until 2024, and then 2025 and beyond. The situation was similar to Apple's work on the electric car, whose release was postponed several times.

For all their benefits, microLED screens were difficult to produce in sufficient quantities. Manufacturing them required cutting-edge technology and a complicated process called LED transfers — the placing of pixels in the display. Though Apple owned the design and manufacturing process for the microLED screens, it enlisted a number of partners to handle mass production and tasks like LED transfers.

News of a shift in the project first emerged in recent weeks, when suppliers announced that they were losing microLED-related contracts. That included AMS-Osram AG, which said the cancellation would force it to cut jobs, potentially sell a manufacturing plant and record a writedown that could approach $1 billion.

For now, Apple believes that OLED is the best current solution for its smartwatch. But it's still eyeing microLED for other projects down the road, the people said. The company is identifying potential new suppliers and processes that could make the technology a reality in its devices, though that won't likely happen anytime soon.

© 2024 Bloomberg LP

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