Apple has entered into a strategic long-term agreement with LG to secure a supply of LCD displays through the year 2013. Under the deal, the world’s second largest maker of LCD screens will receive a $500 million advance from Apple this month in exchange for a guaranteed supply of such displays to use in Macs and other handheld products over the next 5 years. This is certainly good news for LG and shareholders – let’s just hope their price-fixing schemes are a thing of the past.
The strategic agreement between the two is not unprecedented. In fact, one analyst in South Korea estimated that LG already provides around 70 percent of Apple’s flat-panel displays. It is also reminiscent of a similar deal forged between the iPhone maker and five memory suppliers back in 2005, under which the Cupertino based company prepaid a total of $1.25 billion to Hynix, Intel, Micron, Samsung Electronics and Toshiba in order to secure an ample supply of NAND flash memory through 2010.