Samsung Display is considering building a separate production line to produce organic light-emitting diode displays exclusively for Apple’s iPhone, industry sources said Friday.

The facility will start operation within the second quarter of this year to have a production capacity of 120,000 panels per month.

The plan comes after a news report that the display-making unit of Samsung Electronics recently signed a contract with Apple to supply an annual 100 million OLED panels from the second quarter next year for three years.

Samsung has supplied chips for the iPhone.

Samsung declined to confirm the deal, citing corporate policy. Sources predict the OLED panels will replace the current iPhone’s liquid crystal display from the next-generation iPhones that are scheduled to come later next year.

The new production line is expected to be located within the company’s A3 plant in Asan, South Chungcheong Province. The facility produces some 15,000 flexible OLED panels per month.

“Samsung will invest more than 10 trillion won ($8.7 billion) into the A3 plant to double its production capacity,” said Kim Dong-won, an analyst at Hyundai Securities.

By Lee Ji-yoon (jylee@heraldcorp.com)