Apple has its own secret manufacturing plant in California, which is reportedly producing MicroLED displays, a new type of display that could make future Apple gadgets “slimmer, brighter and less power-hungry.”

Right now, the company is said to still be in the testing phase, manufacturing small quantities of the displays. While they won’t arrive for another few years, by developing its own custom displays Apple would have another key differentiator versus rivals.

Apple’s new plant

Apple’s MicroLED project, codenamed T159, is reportedly being overseen by Apple veteran Lynn Youngs, who helped develop the touch screens for the original iPhone and iPad, and now works on the screen tech for the iPhone and Apple Watch.

The plant is a 62,000-square-foot manufacturing facility in Santa Clara, roughly a quarter hour drive from Apple Park. It employs 300 engineers, who are working on MicroLED screens for future products — of which the first is likely to be a future Apple Watch.

Apple also has space dedicated to the complex process of “growing” LEDs, as well as a nearby facility for handling the process of placing the individual pixels onto the display.

Challenges along the Way

While MicroLED has potential advantages over OLED (the Super Retina displays Apple introduced with the iPhone X), there are also big challenges. Chief among these is how much more difficult MicroLED reportedly is to manufacture.

According to Bloomberg, Apple “almost killed” the MicroLED project a year ago. That would fit with the timeframe of a story we wrote about at the time, claiming that Apple was weighing up whether or not MicroLED was a good fit for future devices.

Shortly after this, another report suggested that Apple was downsizing an R&D team it had recruited to develop MicroLED displays in Taiwan, due to production issues. It was also suggested that Apple was working with regular manufacturing partner Taiwan Semiconductor Manufacturing Company (TSMC) to develop applications for micro LEDs in a way that sidestepped some of the production problems it has run into.

Apple’s interest in MicroLED

This isn’t the first time we’ve heard that Apple is interesting in MicroLED technology. Back in 2014, Apple acquired LuxVue Technology, a small California-based company that specializes in MicroLED-based displays for consumer electronics applications.

LuxVue came with several patents related to micro LED technology. At the time, it was reported that Google was interested in using micro LEDs for its second-generation Google Glass headset. Apple is now rumored to be working on its own AR standalone headset, which could be shown off in 2019, ready to ship in 2020.

A short term hit to display makers

The news that Apple may be producing its own displays isn’t good for everyone. Since the news was reported, display makers in Asia saw their stock prices fall. Japan Display dropped as much as 4.4 percent, Sharp fell 3.3 percent, and Samsung declined 1.4 percent.

This news would mark the first time that Apple may design screens end-to-end itself. In the past, it has used off-the-shelf technology, but tweaked the screens slightly, such as calibrating for color accuracy on the iPhone.

Nonetheless, Bloomberg suggests that Apple will likely handle only the R&D involved with MicroLED, and will, “likely outsource production of its new screen technology to minimize the risk of hurting its bottom line with manufacturing snafus.”