A letter sent by Congress to the US Department of Defense could force Apple to review its display supply chain. John Moolenaar, chairman of the Special Committee on the Chinese Communist Party, denounces China’s subsidies to LCD and OLED panel manufacturers, seeing them as a threat to US national security.
BOE and Tianma in the crosshairs
In his letter, the Republican representative specifically targets BOE Technology Group and Tianma Microelectronics. He claims that these two companies, thanks to state aid, have been able to capture a significant share of the global display market, to the detriment of non-Chinese players. A situation that poses a risk to the US military’s supply chains.
But above all, Moolenaar insists on the links between BOE and Tianma and the People’s Liberation Army (PLA). BOE was reportedly founded in 1993 as a military and defense supplier, and its customers include many PLA equipment manufacturers. As for Tianma, it is reportedly a subsidiary of the Aviation Industry Corporation of China (AVIC), a major manufacturer of fighter jets for the Chinese military. Ultimately, it is a bit like Huawei, which has very close ties with the Chinese military and has been able to benefit from numerous government subsidies to catch up with Western competitors.
Towards a ban on BOE?
In light of these elements, the Chairman of the Committee is asking the Pentagon to place BOE and Tianma on the 1260h blacklist, which lists Chinese military companies. This listing could result in sanctions, limiting the commercial capabilities of these companies with the United States. Huawei and Xiaomi in particular are on the same list. A military blacklist does not prevent products from being marketed to the general public, but many government and military institutions could be prohibited from using an Apple product equipped with a BOE screen.
If the Defense Department grants the request, it could complicate Apple’s task. The company relies on BOE for a small portion of its display supplies, including for the iPhone SE 4. A BOE ban could affect imports of some Apple products into the U.S., its largest market.
However, the Cupertino giant has room to maneuver. Samsung Display and LG Display remain its two main suppliers of panels. If BOE is blacklisted, Apple could simply increase its orders from the Korean giants to compensate. This could translate into an increase in the price of Apple products because BOE practices very competitive prices, especially compared to Samsung Display.
