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Musings From An OLED Advocate

Musings From An OLED Advocate

Panel makers are trying to push prices up to regain some of the margin lost during H2 2017 and H1 2018, and TV set makers are trying to hold on to better margins during the year as buyers use inventory to leverage negotiations with panel makers.

The OLED Association, an industry-based organization, provides a forum for the interchange of technical and global market information and regularly updates its members on developments.

OLED Summit

OLED Summit celebrates its 20th anniversary

  • Recently, 125 OLED enthusiasts got together in San Francisco to celebrate the 20th anniversary of the OLED Summit and present the latest in technology and marketing info. In addition, the summit was open to speakers embracing competitive technology; EL QDs and µLEDs. Here are some of the highlights:
  • OLED display revenue is expected to grow from USD 25 billion to USD 50 billion
  • Samsung is working on a hybrid TV, combining blue OLEDs and the associated common layers, which would be vacuum deposited with red and green PL QDs. A stack schematic is provided to show the double layer fluorescent blue material
  • Several issues have delayed or possibly negated the use of QDs as a color filter for LCDs and may spill over to the hybrid approach. The question about the configuration is whether a color filter will be required
  • Cynora, Kyulux, and UDC discussed the status of the triple emitter blue material. Cynora claims they are now at 460 nm and could have a commercial supply in the market by mid 2020; Kyulux said they are at 470 nm with no target date for commercialization; and UDC refused to discuss the subject, except that they are making progress
  • Fraunhofer and the Holst center reported on progress using R-T-R manufacturing and said it would be 25 percent less expensive than current manufacturing methods, but provided no backup to the claim

Financials

BOE H1 2018 YoY revenues and profits down

BOE reported revenue down 2.54 percent YoY, net profit (before extraordinary items) down 75.6 percent, and diluted EPS down 30.9 percent. While the YoY declines do not come as much of a shock given the decline in panel prices, substantial decline in profitability is noteworthy, although this year’s H1 results included results from BOE’s new sensor division, the new Gen 10.5 fab in Mianyang, and the company’s acquisition of SES Imagotag. BOE combines its display and sensor sales, which make up much of total revenue. BOE display sales are estimated to decline ~9.2 percent YoY in H1, slightly better than the industry, which were estimated at –11.9 percent. BOE saw a 8.34 percent increase in operating costs and a 5.15 percent decrease in operating income, along with a 10.2 percent drop in gross margins (17.9% for the period), while BOE’s IoT (+8.3%) and health products (+53.5%) saw YoY increases, but were too small to offset the display sales reductions.

JOLED gets USD 270 million investment from DENSO

DENSO Corporation invested 30 billion yen (USD 270 million) in JOLED Inc. The investment will be used to accelerate JOLED’s development and mass production of in-vehicle OLED displays installed in car cockpits to deliver key-driving information to the driver quickly and accurately and enhance human–machine interfaces (HMIs). The prospects for the flat panel industry will be exceptionally strong in H2 2018 as brands of end-market devices such as smartphones and TVs build up inventories for panels according to Paul Peng, chairman of AU Optronics (AUO) and Innolux chairman, Jim Hung. Both companies have experienced reduced sales and profit in the first half of 2018 due to lower panel prices and excess supply.

Innolux and AUO optimistic about H2

Innolux reported net loss of NTD 1.93 billion (USD 62.92 million) or NTD 0.19 per share in Q218 caused by a continuation of lower panel prices. Trying to create interest in the stock, Innolux chairman, Jim Hung said performance should improve significantly in H2 2018 before robust growth in 2019. Innolux hopes to generate profits in Q3 and Q4 2018 as panel prices rebound in line with rising peak-season demand. Prices for panels in 55-inch and below sizes, including 23.6-, 40-, and 43-inch, have all rebounded since July, and overall inventory levels have returned to normal, Hung said on the sidelines of the Touch Taiwan 2018 trade fair. Innolux will promote mini LED-based large-size panels, while collaborating with Sharp for the development of OLED panels targeting smart wearable applications initially. Innolux will also push the mini LED panels into the public information display (PID) segment, with shipments to begin in the fourth quarter of 2018. The company will also kick off shipments of mini LED-backlit 65-inch TV panels and related products in the second quarter of 2019 with plans to begin shipping mini LED-based automotive panels in 2020. The company expects its shipments of complete TV sets to reach 2-3 million units in 2018 and will ramp up shipments to 5-6 million units in 2019, driven by increased capacity and enhanced marketing.

Peng said at Touch Taiwan 2018 that handset and TV brand vendors now could leverage more resources to promote their products thanks to steep reductions in panel prices seen in the first half of 2018. However, shipments of handset panels are expected to grow at a relatively slow pace in H2, and although TV could increase, IT panels are on a downward trend that was partially offset in Q2 2018 with modest growth.

Displays

Large area panel prices get some relief

Large area panel prices rose in August with TV panels up 4.6 percent. September panel prices of TV and monitors went up sequentially by 1.4 percent and 0.3 percent, respectively. TV displays, saw a moderation of large price increases since July, as TV set makers face a decision point. With moderate levels of inventory at the set level, they can accept higher prices or cut back orders and pull from inventory as they prepare for the holiday season. Panel producers will continue to try to push through increases but are starting to meet resistance from larger TV brands, and while expectations are for a strong holiday season in the North American market, another round of panel price increases will keep discounting to a minimum and cap holiday sales, which sets the tone for the remainder of the year.

Panel makers are trying to push prices up to regain some of the margin lost during H2 2017 and H1 2018, and TV set makers are trying to hold on to the better margins during the year as buyers use inventory to leverage negotiations with panel makers. On a longer term basis, despite competition from OLEDs at the very high end and the closing of some inefficient older generation LCD lines, capacity continues to increase as the Chinese Gen 10.5 fabs reach MP increasing L/A capacity by 15 percent. The new capacity could put pressure on panel prices, with only new formats, such as borderless or ultra-large sizes generating significant premiums and ultra-large (65-inch+) panel capacity, a focus of Chinese panel producers, will also increase, particularly in 2019 and beyond.

Display CapEx to average USD 13 billion from 2019 to 2022 down 40 percent from prior 2 years

DSCC released their Q3 2018, quarterly display CapEx and equipment service report, in which they showed 2016–2018 spending averaging USD 22 billion per year, and 2019–2021 spending dropping to an average of USD 13 billion per year due to the anticipated excess in both smartphones and TV capacity. CapEx peaked in 2017 and could drop to as low as USD 9.8 billion in 2021. Over the period from 2019 to 2022, China represents 82 percent of the CapEx, Korea 16 percent, and Japan 2 percent. Despite the reduction in OLED CapEx, the cancelling of Samsung’s gigantic A5 Gen 6 fab, and the growth in Gen 10.5 LCD fabs, OLED CapEx still exceeds LCDs by 38 percent from 2018 to 2022; 42.4 billion to 30.8 billion, respectively.

LCD TV panel prices face downward pressure in Q4 2018

Most LCD TV panel prices were stable in September, but are facing downward pressure in Q4 due to weakening demand from TV brands, according to DigiTimes. TV vendors apparently have slowed down the pace of the inventory build-ups following relatively strong sales in H1, driven by sharp reductions in panel prices. Global TV shipments reached 172.2 million units in the H1 2018, increasing 8.1 percent from a year earlier, according to data compiled by China-based Sigmaintell, which claims that global TV shipments will edge up 3.4 percent YoY in Q3 and decline in Q4. China’s TV vendors have been reducing their purchases of TV panels since August, while other international brands such as Samsung Electronics have begun to cut their procurement in September, said Sigmaintell, which added that the purchase of TV panels by brand vendors will edge up 6 percent sequentially but down 0.8 percent YoY in the Q3 of 2018. Sales of 32-inch panels will stop climbing in September and are expected to stabilize at around USD 56 per unit. 40-inch panels will settle at USD 79. 43-inch models will continue to edge up by USD 2 to USD 93. Prices of 55- and 65-inch 4K panels will remain stable at USD 157 and USD 245, respectively, in September.

4K, now the standard TV resolution

4K TVs continue to grow in volume and have become the standard for resolution in high-end products. The use of 4K has grown from 10.2 million to 98.4 million as reported by Statista. Since total TVs over 50-inch in size are projected to be 74.2 million in 2018, 4K is also being applied to some of the smaller diagonals. The cash cost of a typical 32-inch HD open cell is expected to decline 1.4 percent in Q3 2018 compared to a year ago, according to the large area display cost model. The contraction rate has slowed from 2.9 percent in the same period last year. The main reason for the slow cost reduction is the increasing price of driver ICs. However, glass substrate and polarizer price reductions have been relatively stable.

Samsung to use PlayNitride µLED for 75-inch TV

Samsung Electronics will offer a 75-inch µLED TV in 2019 with the display panel to be made up of 30- by 50-µm LED chips produced by PlayNitride. PlayNitride has delivered samples of its 15- by 30-µm LEDs to clients and plans to further reduce the chip size to 2.5- by 2.5-µm for smart wearable devices, with production to begin as early as the second half of 2019, according to the company. For production capacity expansion, PlayNitride will issue new shares, with Samsung Electronics, already a shareholder, subscribing to them to increase its stake in PlayNitride to nearly 30 percent. PlayNitride showcased RGB µLED applications at Semicon Taiwan 2018. Using in-house developed PixeLED Display technology, PlayNitride said it can mass transfer sub-20-µm LEDs onto panels of different sizes at a yield rate of 99.9 percent. PlayNitride said it is also developing SMAR Tech, a technology for mass-repairing defective micro LEDs, and the cost of repair can decrease to below 10 percent of mass transfer cost. Meanwhile, China-based San’an Optoelectronics, the supplier of 100 µm LEDs for Samsung’s 146-inch TV, The Wall, has developed 20-µm LEDs and will complete its first µLED production line in first-quarter 2019. Taiwan-based Lextar Electronics has also finished development of 20 µm LEDs.

TVs

September’s early panel pricing report

Panel prices, which have been increasing for the last 2 months are moderating as buyers start to fill quotas and panel producers are a bit more inclined to make volume deals as the spread between cost and ASP has widened. Panel price increases were (primarily TV panels) higher than anticipated in August and it is looking like September is a bit lower, and September notebook pricing will be flat to up ~0.5 percent, monitors flat, and TV panels flat to up 2 percent with the bigger gains on small TV panels. 32-inch panels, which saw gains of 10 percent and 11.1 percent during the last 2 months, could be at the high-end of the flat to 2 percent range, a substantial moderation, and 55-inch panels, which saw increases of 3.3 percent and 0 percent over the last 2 months would be at the low end of the range for September. On a long-term basis, the threat of TV panel oversupply remains greater than the possibility of shortages, especially given Chinese projects that are underway or being planned and ultra-large panel capacity increases are a given, but another round of panel price decreases, similar to March 2017 to June 2018, may cause shuttering of inefficient TV panel production or shifting from TV to other display applications that carry higher margins. LG Display will likely convert some LCD TV panel capacity to OLED over time, which could reduce certain LCD TV panel capacity, but Chinese producers, eager to fill new fabs, will likely pick up the slack rather quickly. As to external expectations for TV set sales, only Sony and Sharp saw an increase in units shipped in Q2 2018 sequentially, with Samsung declining 11 percent sequentially and Chinese brands TCL and Hisense declining 5 percent, and 7.1 percent. All in, after the 3.8 percent sequential decline in TV set shipments in Q2 2018, declined ~1.4 percent, with TCL the only large brand seeing an increase relative to previous expectations.

Most of the recent 8.5G–10.5G TFT LCD production lines planned by China-based flat panel makers come with or retain the ability to produce IGZO TFT LCD panels that still have many advantages over a-Si other than CapEx. While CEC-Panda LCD technology spearheads the production of IGZO panels in China, BOE technology has managed to enter Apple’s notebook supply chain recently and could catch up with CEC-Panda in shipment volume. BOE and CEC-Panda currently both utilize their 8.5G lines to fabricate IGZO panels for TV, monitor, notebook, and handset applications. As 8.5G lines can produce handset panels at high efficiency and also slice PC and TV panels more economically compared to 6G LTPS lines, Hisense, which number in China’s TV sales and primarily targets affordable TVs, was showing its first ever OLED at IFA in Berlin ahead of a launch later this year. The 4K OLED was first teased at CES 2018 at the start of the year and has now been confirmed to go on sale in Australia later this year. Hisense will be competing with other entry-level OLED offerings when it comes to price, notably the £1300 55-inch Toshiba OLED. Using an LG OLED panel, it will have 4K, HDR, and all the typical smart offerings on board. Hisense was a founding member of the QLED TV association and often-downplayed OLED TVs in favor of quantum dot based LCDs.

LG ups its forecast of OLED TV display panels

LGD is reportedly on track to ship 4 million OLED TV panels this year. The Korean giant, according to reports has already shipped 1.3 million panels during H1 2018. According to a report by Korean news outlet News1 Korea, LG plans to roll out 3.7–3.8 million OLED TV panels in 2018, doubling the 1.7 million shipped in 2017. LG Display spokesperson speaking to Yonhap News Agency said the completion of its new production line in China, which is scheduled for the second half of 2019, is expected to improve the company’s monthly production capacity to 130,000 sheets from the current 70,000 sheets. LG will continue to make investment to meet with the rising demand in the market.

Skyworth commits to more OLED TVs

Chinese brand Skyworth will spend an additional USD 73 million to expand its OLED TV module factory from 300,000 units/year to 1,000,000. Last year, Skyworth was the fourth largest OLED TV brand worldwide with a 3.2 percent share, but far behind leader LG Electronics with a 74 percent share and number 2 Sony (SNE) with a 12 percent share. Both BOE and ChinaStar are building plants with OLED TV panel capacity and have pilot lines running, but real competition is not likely to begin until late 2019 or early 2020. LG Display’s monopoly on OLED TVs is expected to be challenged by the two Chinese super display makers and Samsung with its hybrid down conversion system. Samsung hopes to have a Gen 8.5 pilot line with a Kateeva printer running in December 2019.

Competitive technology

Taiwanese and China LED producers invest in µLED technology

Taiwanese µLED makers and panel producers have introduced their latest developments at Touch Taiwan 2018. Reports indicate Apple has secretly visited AUO and Epistar to learn of their progress in µLED technology and discuss possible cooperation with LuxVue.

  • Epistar has developed 400 µm Mini LED RGB packages which will be produced in volume in Q3 2018 and could be adopted by its Chinese and Korean clients for indoor and outdoor displays. In addition, the company has showcased the smaller package, a 250-µm RGB Mini LED package. The product is currently under the development phase, due to the difficulty of mass transfer and high cost. However, Epistar has adopted a pick-and-place technology for mass transfer to speed up the production process for meeting its client’s request of entering mass production in Q4
  • San’an Optoelectronics will set up its first µLED epitaxial wafer and chip production line in first-quarter 2019. San’an has already developed µLEDs 20-micron in diameter, the production line to be constructed will allow the company to make 4-micron LEDs and 10-micron LED flip-chips. San’an has applied for 27 patents concerning micro LED and plans to produce µLEDs in small volumes for small-size panels used in smart wearables, large-size panels of over 100-inch, and automotive taillights as early as year-end 2019. San’an has also become a priority supplier of mini LEDs for large-size displays for Samsung Electronics.
  • Foshan Nationstar Optoelectronics has begun small-volume shipments of mini LED-backlighting devices used in 75-inch LCD TVs and 27- and 32-inch gaming LCD monitors.
  • HC SemiTek has also stepped into the mini and µLED sector. The company will begin production of mini LED backlighting for smartphones, LCD TVs, and automotive displays in H2 2018, the sources said, adding it expects µLEDs to be first applied to AR/VR and smartwatches in 2019
  • Epistar has developed 400 mini LED RGB packages, which will be produced in volume in Q3 2018 and be adopted by its Chinese and Korean clients for indoor and outdoor displays. In addition, the company has showcased the smaller package, a 250-µm RGB mini LED package, at Touch Taiwan 2018. The product is currently under the development phase, due to the difficulty of mass transfer and high cost. However, Epistar has adopted a pick-and-place technology for mass transfer to speed up the production process for meeting its client’s request of entering mass production in Q4

The brightness of green- and blue-light µLED chips has reached the standard required for TVs, while that of red-light chips is below the standard but is expected to see improvements in September 2018. Most of the companies have still reported manufacturing obstacles for Micro LED. However, extra small display for wearables and AR/VR applications could be the early phase commercial market for Micro LED. Since last year, there have been rumors saying Apple will adopt µLED display for the new Apple Watch. However, it is clear that Apple will be using OLEDs for their next watch.

N-Tech forecasts µLED revenue by display and other applications through 2024

N-tech Research released a report that details the future of µLED revenue for displays and other products. They expect revenue to grow from USD 0.5 billion in 2018 to USD 22.2 billion by 2024; the display component grows from USD 0.2 billion to USD 10.2 billion over the 6-year period.

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