Apple says it will cut jobs after scrapping internal plans for watch displays

Apple is ending a long-running project to design and develop its own smartwatch displays, ending another costly research and development initiative.

In recent weeks, the company has halted internal efforts to make screens using microLED technology, according to people familiar with the matter. These displays, which feature brighter, more vivid visuals, will be added to future versions of Apple Watch before potentially making their way into other products.

But in the end, the cost and complexity of the effort proved too great. Apple is reorganizing its display engineering team and cutting dozens of positions in the United States and Asia, said people familiar with the matter who asked not to be identified because the matter is private.

The move to shut down the project comes around the same time as the company’s decision to cancel work on self-driving cars. In both cases, Apple offered at least some affected employees the opportunity to find other positions within the company. If they can’t find new jobs – which is a likely scenario for some of them – workers will be laid off and receive severance pay. An Apple spokesman declined to comment.

The display project is part of a broader push to design more technology within Apple. Although the company has customized displays in its products, they are heavily based on designs from partners such as LG Display Co. and Samsung SDI Co. By bringing more processes inside Apple, the company hopes to gain an advantage over its competitors.

It also sees the promise of microLEDs, made from millions of tiny light-emitting diodes, and wants to play a key role in their development. The technology consumes less power, reproduces colors more accurately, and allows for thinner devices.

The effort started within Apple’s hardware engineering organization about seven years ago. The position was later transferred to Chen Wei, the head of Apple’s display department. The project, codenamed T159, was transferred to Apple’s Hardware Technology Group a few years ago.

Apple has even built its own screen manufacturing facility in Santa Clara, California, near its Cupertino headquarters, where hundreds of employees can test the production of microLED screens. Many of the layoffs involve personnel at the factory, as well as the Apple Display Engineering Center in Asia near the heart of the company’s supply chain.

A tour of the Santa Clara facility this week showed the building still operating, with cars in the parking lot and a small number of employees entering and exiting the building.

When Apple hatched its microLED plans a few years ago, it viewed the technology as a successor to the current standard organic LED screens (OLED). The company expects to eventually roll out microLEDs into all of its products, from Apple Watch to iPhones to Macs.

In 2018, the company believed it could equip the Apple Watch with a screen as early as 2020. But that timeline was eventually pushed back to 2024, then 2025 and beyond. The situation is similar to Apple’s work on electric cars, whose launch has been delayed multiple times.

Despite their many advantages, microLED screens are difficult to produce in quantities. Making them requires cutting-edge technology and a complex process called LED transport (which places the pixels in the display). Although Apple owns the design and manufacturing processes for microLED screens, it has recruited many partners to handle tasks such as mass production and LED transfer.

News of the project’s shift first emerged in recent weeks, when suppliers announced they would lose microLED-related contracts. That includes AMS-Osram AG, which said the cancellation would force it to lay off workers, possibly sell a manufacturing plant and record a writedown that could approach $1 billion.

Currently, Apple believes that OLED is the best solution for its smartwatches. But the company is still considering using microLEDs for other future projects, people familiar with the matter said. The company is looking at potential new suppliers and processes to make the technology a reality in its devices, although that’s unlikely to happen anytime soon.

© 2024 Bloomberg

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