Accounting for the panel yield rate and other manufacturing costs, the total display system costs are estimated to be $27.41, an NPD report found.
The cost of the Apple Watch flexible AMOLED display is estimated to be several times higher than equivalently sized LCD displays, and higher than the more mature glass-based AMOLEDs currently used in smartphones, according to a report from IT research firm NPD DisplaySearch.
The 42mm Apple Watch is believed to use a 1.5-inch diagonal AMOLED fabricated on a plastic substrate, protected by a proprietary thin and flexible solid-phase plastic seal, and the report said the cost to produce the display for the recently announced Apple Watch is $7.86.
The touch panel interface, cover lens and other items add another $19.55 to the total. Accounting for the panel yield rate and other manufacturing costs, the total display system costs are estimated to be $27.41.
In such a small device, even an expensive display is likely to account for a relatively small percentage of the total cost, noting display cost typically scales with area, Charles Annis, vice president of manufacturing research at NPD DisplaySearch, told eWEEK.
"I am not sure what the total bill of materials for the watch is, but assume they are targeting profit rates similar to iPhones," he said.
Annis said he doesn’t see the Apple Watch as a game-changer for the industry from a display perspective.
"Except for the sapphire cover lens, both Samsung and LG’s watches have similar displays," he explained. "I think it is to be determined if it will be a game-changer depending on the total package, applications and if Apple can create enough market pull."
Paul Gray, director of European research for NPD DisplaySearch, noted there didn’t feel like a moment of revelation about its functionality, which was perhaps what some were expecting, and the proof will be whether its adopters find the device useful--and worth it.
Gray also noted the Apple Watch probably won’t affect makers of fitness bands, as pricing levels are very different and fitness bands are targeted at a very specific niche, at impulse-level pricing.
"If the watch industry is anything to go by, then this will be an incredibly diverse market with lots of defensible niches," he said. "Apple Watch doesn’t look robust enough for many outdoor sports, for example."
The report also noted although production costs are higher, the benefits of adopting a plastic AMOLED panel include a display module that is approximately 65 percent thinner and lighter than an LCD display and 50 percent thinner and lighter than a conventional AMOLED display.
Shipments of AMOLED panels for the Apple Watch alone are expected to reach 8 million units this year, as Apple builds up inventory for the 2015 launch.
"I am assuming the watch will be more successful than competitors because it is Apple and an assuming an impressive array of apps. But I also assume it will take a while for the market to evolve and for battery technology to improve and the watch thickness to decrease," Annis said. "I think it is coming, so I think Apple is doing the right thing coming out with its first-generation device now but I guess it will be a moderate success at first with the chance to grow in future years."