Apple has partnered with Taiwan Semiconductor Manufacturing Co. to develop ultra-advanced display technology at a secretive facility in Taiwan, Nikkei Asia learned.

The California tech giant plans to develop micro OLED displays — a radically different type of display built directly onto chip wafers — with the ultimate goal of using the new technology in its upcoming augmented reality devices, sources briefed on the matter said.

Apple is collaborating with its longtime chip supplier TSMC because micro OLED displays are not built on glass substrates like the conventional LCD screens in smartphones and TVs, or OLED displays used in high-end smartphones. Instead, these new displays are built directly onto wafers — the substrates that semiconductors are fabricated on — allowing for displays that are far thinner and smaller and use less power, making them more suitable for use in wearable AR devices, according to sources familiar with the projects.

The project represents a further deepening of Apple’s relationship with TSMC, the sole supplier of iPhone processors, even as the US tech giant works to reduce its reliance on other major suppliers. The Taiwanese chipmaking giant is also helping Apple build its in-house designed central processors for Mac computers.

The micro OLED project is now at the trial production stage, sources said, and it will take several years to achieve mass production. The displays under development are less than 1 inch in size.

“Panel players are good at making screens bigger and bigger, but when it comes to thin and light devices like AR glasses, you need a very small screen,” said a source who has direct information on the micro OLED R&D project.” Apple is partnering with TSMC to develop the technology because the chipmaker’s expertise is making things ultra-small and good, while Apple is also leveraging panel experts’ know-how on display technologies.”

Some parts of the planned microdisplay manufacturing will use TSMC’s existing chip-production equipment and processes, sources said.

The project is one of two being conducted at Apple’s secretive labs in Longtan District in the northern Taiwanese city of Taoyuan. In addition to micro OLED displays, the company is also working on micro LED technology, and has trial production lines in place for both types,Nikkei has learned.

Apple’s complex in Longtan Science Park consists of several unmarked white buildings — there is no company logo or address on the outside, and only a very faint apple symbol could be seen in the lobby, Nikkei reporters saw on a recent visit. Apple registered a company at the park in 2014, and expanded it in 2020. The complex is within walking distance of TSMC’s advanced chip-packaging and testing plant, which is located in the same science park.

Apple has hired dozens of veterans from Taiwanese display maker AU Optoelectronics to work on the micro OLED project, one of the sources familiar with the situation said, as well as display experts from Japan and elsewhere. Anyone who signs up to work on the program must sign a strict non-disclosure agreement that forbids them from even meeting with friends or acquaintances working in the tech industry, the source added.

The US tech giant on Monday posted on a Taiwanese job platform seeking applicants to work in Longtan who have expertise in operating OLED vacuum evaporation equipment, packaging and testing equipment, and measurement equipment. It is the first time for Apple to hire manufacturing-related employees in Taiwan via public platforms.

Apple is not the only company pursuing this new line of display technology. Sony Semiconductor Solutions, a longtime Apple supplier, says it has developed micro OLED display technology that can be used in AR and VR glasses, as well as for other industrial and consumer products.

China’s display national champion BOE Technology Group has teamed up with Yunnan North OLiGHTEK Opto-Electronic Technology and U.S.-based Kopin, an ultra-small display technology provider, on a joint-venture to develop micro OLED displays for wearable and AR devices.

Apple’s other display project at the Longtan campus focuses on micro LED technology, which the company hopes to eventually use in the Apple Watch, iPads, and MacBooks. Apple has partnered with Taiwanese LED company Epistar to co-develop the technology.

Like micro OLEDs, the micro LED project also involves some chip manufacturing technology. The components are 100 times smaller than those used in LED lighting products and they do not need backlight modules like traditional LEDs and LCDs, meaning the display can be much thinner. Micro LEDs also provide high color contrast and can be used to make curved or foldable screens, similar to OLED screens.

Samsung, Apple, BOE Technology, and China’s largest LED maker San’an Optoelectronics are all working to make the technology commercially viable, but finding a way to mass-transfer millions of tiny components to a substrate accurately and affordably remains a major hurdle.

Apple’s push to develop these new display technologies is part of its efforts to reduce its dependence on Samsung Electronics, the global leader in OLEDs — and the US company’s biggest rival in the smartphone arena. The South Korean company is Apple’s main supplier of the cutting edge displays, which are now seen as a must-have feature for high-end smartphones. OLED screens are the second-most costly component in the iPhone 12 range, after the Qualcomm 5G modem.

“Not every technology that Apple develops will be introduced or actually used in its products, but the company could strategically apply patents for its own patent portfolio and technology advancements to gain more control in the next generation technologies,” one of the people said.

TSMC declined to comment for this story. Apple did not respond to repeated requests for comment.

Eric Chiou, a veteran display analyst at research agency TrendForce, told Nikkei that Micro OLED could be the most ideal display technology for next-generation AR displays as it can make a display ultra-small, reducing the overall weight of the device, but also comes with high-resolution. “The technology is a mix of semiconductor and display manufacturing know-how,” Chiou said.

“However, it is currently in its early stage of development. It is not likely Apple could immediately introduce its self-developed technology into its first AR products in one to two years,” the analyst added.

This article first appeared on Nikkei Asia. It’s republished here as part of 36Kr’s ongoing partnership with Nikkei.