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[Analyst Column] LCD Industry Administration to Worsen after 3 Years

Choong Hoon Yi, Chief Analyst, UBI Research

BOE is intending to carry out a large amount of investment in order to operate Gen10.5 LCD line from 2018. Meanwhile, key set makers including Apple, Samsung Electronics, LG Electronics, and Panasonic are devising strategy to move from LCD to OLED for smartphone and premium TV displays. As such, it is becoming more likely for the LCD industry to be in slump from 2018.

At present, the area where LCD industry can create profit is LTPS-LCD for smartphone. The forecast smartphone market for this year is approximately 15 billion units. Of this, Samsung Electronics and Apple are occupying 20% and 15% of the market respectively. OLED equipped units are less than 2 billion.

However, from 2018 the conditions change greatly. Firstly, Apple, which has been using LCD panel only, is estimated to change approximately 40% of the display to OLED from 2017 earliest and 2018 latest. Apple is testing flexible OLED panels of JDI, LG Display, and Samsung Display, and recommending them to invest so flexible OLED can be applied to iPhone from 2017. The total capa. Is 60K at Gen6. As new investments for Gen6 line of Samsung Display and LG Display are expected to be carried out from 2016, supply is theoretically possible from 2017.

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If 5inch flexible OLED is produced from Gen6 line, under the assumption of 50% yield at 60K capa. 65 million units can be produced annually, and approximately 1 billion units if the yield is 80%. If Apple’s iPhone shipment in 2017 is estimated to be around 2.7 billion units, within the 50-60% yield range approximately 25% of the display is changed to OLED from LCD, and if yield reaches 80% around 40% will change. The companies that are supplying Apple with LCD for smartphone, LG Display, JDI, and Sharp, are expected to show considerable fall in sales and business. These 3 companies could be reduced to deficit financial structure just from Apple’s display change

Furthermore, as Apple is not producing low-priced phones, under the assumption that future iPhone could all have OLED display, Apple could cause the mobile device LCD industry to stumble after 3 years.

Samsung Electronics also is gradually changing Galaxy series display to OLED from LCD. Of the forecast 2015 shipment of 3 billion units, 50%, 1.5 billion units, has OLED display, but Samsung Electronics is expected to increase flexible OLED and rigid OLED equipped products in future. Particularly, as Apple is pushing for flexible OLED application from 2017, Samsung Electronics, whose utilizing OLED as the main force, is estimated to increase flexible OLED usage more than Apple. It is estimated that all Galaxy series product displays will be changed to OLED from 2019.

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Under these assumptions, of the estimated smartphone market in 2020 of approximately 20 billion units, Samsung Electronics and Apple’s forecast markets’ 7 billion could be considered to use OLED.

Samsung Display is strengthening supply chain of set companies using their OLED panels. Samsung Display is supplying OLED panels to diverse companies such as Motorola and Huawei as well as Samsung Electronics, and also expected to supply rapidly rising Xiaomi from 2016. If smartphone display is swiftly changed to OLED from LCD from 2017, Chinese display companies that are currently expanding TFT-LCD lines are to be adversely affected.

Additionally, in the premium TV market, LG Electronics mentioned that they will focus on OLED TV industry at this year’s IFA2015. As a part of this, LG Display is planning to expand the current Gen8 34K to 60K by the end of next year. Furthermore, in order to respond to the 65inch market, Gen9.5 line investment is in consideration. In the early 2015, Panasonic commented that they were to withdraw from TV business but changed strategy with new plans of placing OLED TV on the market in Japan and Europe from next year.

As Samsung can no longer be disconnected from the OLED TV business, there are reports of investment for Gen8 OLED for TV line in 2016. Although OLED TV market is estimated to be approximately 350 thousand units this year, in 2016, when Panasonic joins in, it is expected to expand to 1.2 million units. The OLED TV’s market share in ≥55inch TV market is estimated to be only 4% but in premium TV market it is estimated to be significant value of ≥10%.

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If Samsung Display invests in Gen8 OLED for TV line in 2016, from H2 2017 supply to Samsung Electronics is possible. As OLED Gen8 line’s minimum investment has to be over 60K to break even, it can be estimated that Samsung Display will invest at least 60K continuously in future.

Under these conditions, LCD industry can only be in crisis. Firstly, it becomes difficult for Sharp to last. Sharp, which is supplying TFT-LCD for Apple’s iPhones and LCD for Samsung Electronics’ TV, will lose key customers. Secondly, BOE, AUO, and JDI, the companies selling LCD panels to these companies, are not ready to produce OLED and therefore damage is inevitable.

BOE is carrying out aggressive investment with plans to lead the display industry in future with operation of Gen10.5 LCD line. Therefore, from 2018, as the main cash cow items disappear, administration pressure could increase.

Solution Process Panel, Cheaper To Produce than LCD

According to 2015 Solution Process OLED Report, published by UBI Research on October 14, solution process technology could produce 55inch OLED panel at approximately 43% cheaper cost compared to WRGB method.

The report added that this value is the result of analysis of 2015 Q2 55inch UHD OLED panel price and yield, which is slightly higher than current production price of 55inch UHD LCD panel. However, considering that the solution process OLED structure will become simplified and that yield of backplane and encapsulation can be improved, the OLED panels will be able to be produced at lower cost than LCD panel. The report also revealed that solution process OLED can be an alternative solution for large area OLED panel in achieving price competitiveness.

Solution process is a technology that can produce large area RGB pixel OLED panel using Gen8, or higher, equipment without cutting the mother glass. Key AMOLED panel companies are active in developing this technology.

However, as solvent is used in order to turn the existing evaporation material into ink, its purity is decreased leading to lower emitting efficiency and therefore lower lifetime. Despite these factors, key panel companies’ enthusiasm for solution process technology is due to the high emitting material usage efficiency without using color filter, and simple structure compared to WRGB OLED panel which leads to production cost decrease.

Panasonic has been most active in developing solution process applied OLED panel, and has presented several times in CES and IFA. BOE and AUO also have revealed solution process OLED panel produced via ink-jet manufacturing equipment, and CSOT is considering solution process development. Samsung Display and LG Display, leaders of AMOLED industry, are also actively developing the technology. LG Display has adopted Gen8 ink-jet manufacturing equipment, and Samsung Display has started solution process OLED panel development with a focus on ink-jet manufacturing equipment companies.

Material and manufacturing equipment companies as well as panel companies are leading the solution process technology development and commercialization. Kateeva agreed on technology collaboration with Sumitomo Chem. while Merck did the same with Seiko Epson. DuPont recently revealed that they enlarged solution process OLED material production facilities and began operation.

Following these participation by key panel, material, and manufacturing equipment companies in solution process technology development and commercialization, it is anticipated that the solution process OLED panel market will record rapid growth.

UBI Research’s 2015 Solution Process OLED Report forecast that solution process OLED panel market will actively begin mass production from 2018 and show approximately US$ 2,329 million in 2020.

151016_Solution process OLED panel, LCD보다 저렴하게 제작 가능

Apple’s Next iPhone, Can Flexible OLED Be Applied?

Smartphone’s hardware performance has improved as much as possible and can no longer be the differential point within the market. Following this, Samsung’s Galaxy Note 4 Edge and S6 Edge, and LG’s G-flex series are differentiating themselves from existing products through flexible (plastic) AMOLED panel applied new designs and functions. Particularly, Galaxy S6 Edge’s higher than anticipated demand means that the ratio between total Galaxy S6 and S6 Edge demand was expected to be approximately between 8:2 and 7:3, but at present it is estimated to be 5:5. To meet this demand, Samsung Display began actively operating A3 line, and carried out investment to convert A2 rigid line to flexible line.

 

As interest in flexible OLED is rising within the next generation smartphone market, there is much talk that Apple will also apply flexible OLED to the next product. UBI Research’s Flexible OLED Annual Report, published on 18 June, analyzed Apple’s flexible OLED application potential and forecast scenario.

 

According to the Flexible OLED Annual Report, other than Samsung Display, LG Display is the only company with the technology to mass produce flexible AMOLED. Japan Display and AUO also possess flexible AMOLED production technology and with investment, mass production is analyzed to be possible. Therefore, for the Apple to apply flexible OLED to the iPhone series to be released in 2017, the Gen 6 flexible AMOLED line investment of LG Display, Japan Display, or AUO has to be carried out within 2015. However, as Japan Display and AUO’s mass production technology has not been verified, depending on the currently mass producing LG Display’s Gen 6 line investment timing the flexible OLED applied iPhone release date will be decided.

 

As the results of analyzing future model’s shipment based on the analysis of iPhone series’ sales progress so far, to meet the demand for Apple’s flexible AMOLED applied model’s shipment in 2020, approximately 170K monthly capa. by Gen 6 (considering operation and yield rate) is needed. Considering the recent trend of 20K capa. per 1 line, 8 or 9 flexible AMOLED line are required, and Apple’s future flexible AMOLED line investment is estimated to be actively carried out.

 

On the other hand, flexible AMOLED market is forecast to grow at 57% CAGR from 2016, and show approximately US$ 35,000 million revenue in 2020.

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<figure 1. Flexible AMOLED Panel Market Forecast>

Flexible OLED Annual Report

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The data used for this report has been compiled, based on OLED companies’ information, though wired/wireless communication or in person, and participation in exhibitions, conferences, and seminars with the organizers’ consent.

The market forecast data in this report has been collected through simulation based on expected operation rate and yield rate on the basis of UBI Research’s DB in accordance with investment trends and the technological level of Flexible AMOLED panel companies.

Detail

Executive Summary

A summary for quick understanding of entire report.

Issue Analysis

Smartphone’s hardware performance has improved as much as possible and can no longer be the differential point within the market. Therefore companies are active in differentiating their products through flexible AMOLED applied designs and functions. A key smartphone production company Samsung Elec. is selling Galaxy S6 Edge more than anticipated, and Apple is also considering flexible AMOLED for the next model.

However, as Samsung Display and LG Display are the only companies that can mass produce flexible AMOLED, the demand currently exceeds the supply.

This report analyzed the sales trend of Samsung Elec. and Apple so far and forecast estimated sales until 2020. Through analysis of panel companies’ flexible AMOLED line capa. and number of flexible AMOLED applied smartphone,  enabled forecast of key panel companies’ flexible AMOLED line investment timing.

Flexible AMOLED Panel History and Company Trend

Compiled released flexible AMOLED panels by year for quick understanding. Analyzed key panel companies trends, including Samsung Display and LG Display’s, to understand the industry’s direction.

Flexible AMOLED Panel Technical Skills Analysis

Based on the traits of flexible AMOLED panels so far released by Samsung Display, LG Display, Japan Display, AUO, and BOE, analyzed the technical skills by companies.

Flexible AMOLED Process Technology / Supply Chain

Samsung Display and LG Display’s mass produced flexible AMOLED panel structure and related equipment, supply chain related to material companies, and production process compilation.

Key Panel Companies’ Line Situation and Investment Trend

Based on the key flexible AMOLED panel companies’ mass production line situation and estimated investment plan of 2015-2017, this section was prepared to aid in business strategy planning of companies within flexible AMOLED value chain.

Development History Analysis of OLED Lighting Panel Companies

Analyzed key OLED lighting companies’ 2015 trends to understand overall situation of the industry.

Analyzed development history of key OLED lighting companies to understand OLED lighting development trend by company in order to deal with the market trend.

Flexible OLED Market Forecast (2015-2020)

Due to the Galaxy S6 Edge’s success and estimation that Apple’s next model will have flexible AMOLED panel, active flexible AMOLED investment by key panels is anticipated. Within OLED lighting, flexible is estimated to create high added value. With the active investment by key OLED lighting panel companies, including LG Chem., forecast it is estimated that market will actively grow. This report estimated, compared, and analyzed key OLED display and OLED lighting panel companies’ flexible OLED investment strategy and number of flexible OLED application. Through this, forecast flexible AMOLED panel, flexible OLED lighting market, and plastic substrate (key material for flexible OLED) market to aid in market analysis and business strategy planning.

Analysis of SID Papers (2013-2015)

Analyzed last 3 years of SID’s flexible OLED related papers from diverse perspectives. Based on the 3 years of technology development trend, enabled technology development forecast.

Flexible AMOLED Latest Technology Trend

Summarized and compiled flexible OLED related key papers revealed in SID 2015. Expected to aid in understanding of recent flexible OLED related issues and technology trend.

Format : PDF / Page : 143p / Updated : 2015. 6

Contents

1. Executive Summary

2. Issue Analysis
2.1 Apple iPhone’s Flexible AMOLED Application Potential and Investment Forecast
2.2 Samsung Display’s Flexible AMOLED Investment, A2 Conversion vs. New A3

3. Flexible AMOLED Panel History
3.1 LG Display
3.2 Samsung Display
3.3 Others

4. Trend Analysis of Flexible AMOLED Panel Companies
4.1 AUO
4.2 BOE
4.3 Japan Display
4.4 LG Display
4.5 Samsung Display
4.6 NVO
4.7 Others

5. Flexible AMOLED Panel Technical Skills Analysis

6. Flexible AMOLED Process Technology
6.1 LG Display
6.2 Samsung Display

7. Flexible AMOLED Panel Supply Chain
7.1 LG Display
7.2 Samsung Display

8. Key Panel Companies’ Line Situation and Investment Trend

9. Flexible OLED Lighting History

10. Trend Analysis of Flexible OLED Lighting Companies
10.1 LG Chem.
10.2 Konica Minolta
10.3 Osram
10.4 Others

11. Flexible OLED Market Forecast (2016-2020)
11.1 Outline
11.2 Flexible AMOLED Display Panel Market
11.3 Flexible OLED Lighting Panel Market
11.4 Flexible OLED Substrate Market

12. Analysis of SID Papers (2013-2015)
12.1 Outline
12.2 Total
12.3 by Company
12.4 by Topic
12.5 by Year
12.6 AI Analysis

13. Flexible AMOLED Latest Technology Trend

 

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White OLED Display Market to Grow Rapidly to 150 Million Units Production in 2020

Large size OLED TV production is one of the hot issues within the display market. Although OLED has long been a focus for the next generation display, the market share of OLED display is still low. According to UBI Research, a market research company, despite the continued increase in OLED panel production volume and application scope, the point when it moves toward consumer market from producer market will be another leap for the display industry.

UBI Research’s White OLED Display Annual Report (published April 15, 2015) notes that mass production actualization of large size display using RGB structured OLED panel has not been possible due to the dead space from drooped effect. Therefore, UBI Research analyzed that the additional processes and investment cost in order to improve this increases the production cost resulting in decreased competitiveness.

Currently, OLED panel with WRGB structure is being regarded as the only technology that can achieve large size display. As key production companies revealed in SID 2014, concentrated efforts in WRGB OLED research and production resulted in approx. 80% of target yield. In 2015, supply rate is estimated to be 600 thousand units, a 40% increase from 2014, and 1.6 million units in 2016. Chinese key panel companies, led by AUO and BOE, also possess pilot lines for large area WRGB OLED panel mass production including Gen8. (Source: White OLED Display Annual Report, UBI Research)

Solution process applied technology is being developed in close pursuit of WRGB OLED, but UBI Research surmises that it will take 3~4 years for the active mass production competing with efficiency and merits of WRGB structure.

UBI Research forecast WRGB OLED’s unrivaled path will continue for another 5 years or so with approx. 150 million units of WRGB OLED display production out of over 1,000 million OLED display units in 2020. Large size white OLED display panel for TV market is expected to record approx. 1.6 million units in 2016 and grow to produce US$ 13,759M in revenue in 2020 (figures 1, 2).

If the selection of WRGB OLED can solve the RGB structure’s limit in large area panel mass production, possible active OLED TV production is anticipated. With the publication of UBI Research’s report the timing of this is expected to be a point of much discussion. Additionally, further analysis is needed on whether WRGB OLED is really the only technology for large size display, and if so for how long WRGB OLED’s peerless growth can last.
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