Over the last several months, shortages of iPhone LCD screen assemblies has increased overall costs effecting availability, margins and consumers options to trade-in or sell their broken device instead of choosing to repair. Shortages in China’s supply chain aren’t very common, so what’s really causing the issue, when should things return to normal and what can we expect into the future?
Looking at historical data and shifts within LCD consumption outside of 3rd party repair shops can shed some light on the current supply and pricing conflicts.
Historical Pricing Trend
The data below represents the price fluctuation of cracked LCD screen assemblies (OEM) since the beginning of 2014 to present for the most popular iPhone and Samsung models.
We’ve been buying back LCD screens since 2012 and this has defiantly been the first time such a spike has occurred for such a significant period of time. Rarely does the price go up and typically trends down slowly over time with no significant increases or decreases along the way.
Showing the most popular models, it’s evident that the shortage and crazy pricing has really mainly been centered around iPhone 5/5c/5s models.
So why haven’t we had crazy pricing trends with previous models?
4/4s was a Beast!
A few points on 4/4s:
- iPhone 4 was released back on June 24th 2010
- Wasn’t discontinued till Sept 10th 2013 for a total of 1,175 days in production!
- It’s predecessor, (4s) was released 478 days later (1.3 years)
- Since these two models, release time frames average just under a year at 358 days
- Production for newer models are stopped/scaled down ~50% sooner.
- 4s wasn’t discontinued by the carriers until late 2014 giving it a total shelf life of 3 years! Newer models are lucky to see 2, if that.
Also worth noting, i4/4s were totally different releases where multiple models are released at the same time now. Today, the choice is 6s or 6s Plus where die-hard Apple customers bought both the i4 and i4s within 1 1/2 years of each other.
We never had issues because i4/4s was a true Champion that had historic sales for a prolonged shelf life. This saturated the market with plenty of used LCD screens that filled the repair supply chain for years. Copies weren’t rarely needed to balance supply issues which also kept prices low and experienced normal depreciation.
When needed, a smaller screen and lower resolution made it easy for copies to be produced. Heck, even an iPod 4th Gen LCD was used in an assemblies without many even knowing the difference.
Official Channel Consumption
Shorter release dates and production dates aren’t the only reason for LCD shortages.
Competition for used devices, including the LCD screens has drastically changed over the last 2 years. Consider where today’s need for a refurbished device differs from yesterday’s and you’ll see what I’m talking about…
- AppleCare – Reduced price by half and now covers accidental damage (cracked LCD) with a low deductible + two claims per year. Apple typically swaps out the device with a refurbished unit.
- Post-Paid Carriers – Fierce competition has led carriers offering older devices for free if they make the switch. I only checked Verizon and AT&T but as of today, both offer 5/5s/5c refurbished devices for both their prepaid, contract and phone leasing programs as web-only offers.
- Pre Paid Carriers – Virgin, Boost, GoPhone (just to mention a few) all offer prepaid bundles with older devices. Today, all three of these prepaids offer the i5/5s/5c models with and without bundles directly from their website.
- BuyBack / Trade-In Programs – Brightstar said “Buckback is a must” for carriers at CTIA 2015. Consumers old devices are essential to carriers bottom line. Verizon choose to ditch 3rd party buyback partners and Sprint collected a world record 103,582+ devices in a week. Apple, BestBuy and pretty much any major brand now offers a buyback program. These devices are typically processed by large corporations overseas who ultimately return a majority of the devices back to the carrier.
The need for used devices and prioritizing buyback programs down official channels removed the amount of handsets that might otherwise end up in consumers hands and then later fixed by a repair shop where the LCD is likely to be sold to recyclers and end up back into the repair industries supply chain.
These growing segments have everyone competing for the same parts.
Red Haze Defect
I’m still puzzled by the “Red Haze” halo defect found on the iPhone 5/5c/5s models. A seemingly good LCD screen seems to generate a foggy red shadow around the outer perimeter of the LCD module over time.
The polarizer, digitizer and OCA film/LOCA aren’t responsible and is present within the actual LCD layer itself. If refurbished, the LCD screen still works but has an awkward cosmetic blemish that can often times get worse after the reclamation process.
US consumers have a high expectancy of quality when paying today’s cracked screen repair prices which caused Red Haze to have little to no value until the shortage.
How can this defect impact supply?
The chart below shows the overall increase in Red Haze units overtime collected from our recycling intake from 2014 – Present.
While Red Haze currently has recycling value, this demand is typically consumed by those who prefer savings over finished goods quality. Many US buyers looking for cheaper options along with less picky international markets has kept these units circulating , providing extra (and much needed) recycling revenue for repair shops.
Red Haze Notes:
- Increases overtime in OEM and Refurbished units.
- Some halos are just too foggy and will be scraped rather than reclaimed.
- Lower refurbishing craftsmanship can increase the rate of fogginess.
This defect is only on i5/5c/5s models ….the product line that’s had the craziest fluctuations. Weird coincidence? I don’t think so. If you remove this amount of screens from potentially being returned as a finished goods, the impact is bound to be felt.
Shortage of Raw Materials & Parts
The small parts such as frames and glass digitizers aren’t in short supply rather it’s the LCD screens themselves. Not OEM but Copy LCD screens.
There’s likely hundreds if not thousands of varying sized foreign businesses that will refurbish a used screen and maybe a handful that have the ability to create a copy LCD screen.
- A larger screen
- Higher resolution
- More advanced components
- Higher technical labor force needed to produce and assemble a copy LCD.
- Upfront Capital
- Risk of changes in OEM supply after copies are produced.
Manufactures are reactive to these demands rather than assume the risk of proactively forecasting a core component’s future expectations in the roller coaster telecom industry.
Copies always drive down the overall cost of replacement screens and increased risks and uncertain demand has limited the amount of copies available.
Current prices and supply should ramp up copy production and give temporary relief but realizing future models could face the same cycle will give the repair industry another challenge to deal with down the road.
How has the current LCD supply and price situation impacted your repair business?
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