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Musings From An OLED Advocate

Musings From An OLED Advocate

TV panels, which tend to vary between 38 percent and 53 percent of sales for large panel producers, experienced ASPs between flat and down 1.9 percent, 32-inch panels had a 7.1 percent decline as manufacturers dealt with tightening margins particular in that panel size.

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.

Financials

Taiwanese flat panels industry suffers rough 3QFY18

In 3QFY18, all of Taiwan’s panel makers again felt the effect of continued lower large area ASPs and the increasing penetration of OLEDs in the smartphones market. The major suppliers, AUO, Innolux, GiantPlus, HannStar, and CPT were all down YoY in revenues in 3QFY18. Most were also down sequentially in September, which is usually the high month of the quarter.

GiantPlus Technology’s revenues declined 0.46 percent on month and 20.26 percent on year in September. Third-quarter revenues came to NTD 2.618 billion, decreasing 1.02 percent sequentially. For the first three quarters of 2018, revenues totaled NTD 7.767 billion, declining 17.66 percent YoY.

Innolux posted revenues of NTD 24.4 billion (USD 784.22 million) for September, which were flat sequentially, but down 9.5 percent YoY. Innolux’s shipments of large-size panels in the month totaled 11.03 million units, down 0.2 percent sequentially; those of small- to medium-size panels reached 22.36 million units, down 9.9 percent sequentially. Third-quarter revenues were NTD 73.9 billion, up 11.2 percent sequentially, but down 7 percent YoY. Total shipments of large-size panels in the quarter were up 3.5 percent on quarter to 33.12 million units, and small- to medium size panels were up 9.3 percent to 74.6 million units.

HannStar Display saw its revenues dip 13.1 percent sequentially and 45.9 percent YoY to NTD 1.153 billion in September, as shipments of its small- to medium-size panels dropped 3.2 percent sequentially to 34.43 million units in the month. Shipments of monitor panels and own-brand large-size products increased 19.2 percent on month to 176,000 units in September, HannStar said. HannStar’s third-quarter revenues came to NTD 4.102 billion, down 38.39 percent YoY.

Chunghwa Picture Tubes’ September revenues dropped 14.5 percent sequentially and 41.6 percent YoY to NTD 1.922 billion (USD 62.06 million) in September due to a lack of new products for the smartphones segment. The revenues dropped despite increases in unit shipments in September: large-size LCD panels increased 165.5 percent sequentially to 192,000 units, while those of small- and medium-size applications rose 78 percent to 30.45 million units. Demand for of older-generation panels from handset makers were weak in September, as CPT is set to begin shipping profile-cut panels for smartphone applications in early October, according to industry sources.

AU Optronics (AUO) reported September sales of NTD 27.44 billion, down 1.3 percent sequentially and down 5.6 percent YoY. Historically, September has averaged up 1.3 percent sequentially and down 6.5 percent YoY (3 year averages), so the month was not far off from the averages. 3QFY18 total sales were NTD 81.04 billion, ~2.6 percent above consensus and were up 8 percent sequentially but down 7.3 percent YoY. Shipments of large panels for September were 9.96 million units down 0.8 percent sequentially and down 2.6 percent YoY, while small panel shipments were 13.07 million units, down 6.3 percent sequentially and 20 percent YoY. For the third quarter, large panel shipments were 29.8 million up 6.5 percent sequentially (slightly above 3 year average of 5.7 percent) and up 2.4 percent YoY (better than 3 year average of flat), while small panel shipments were 42.56 million, down 6.1 percent sequentially (way below 3 year average of 4 percent) and down 9.1 percent YoY (way below 3 year average of 0.7 percent), but variations in Q3 shipment results, particularly with small panel products, can be quite volatile with YoY spreads over 40 percent.

LG Display shows small profit in OLEDs and overall in 3Q18

LG Display (LPL) reported Q3 results of 6.10 trillion won (USD 5.387 billion), and operating profit of 140.1 billion won (USD 123.7 million). Net profit was 17.5 billion won (USD 15.45 million), which was down over 96 percent YoY but up from the previous two quarterly losses. 

Data. Capacity – Reported 13.4 million m2 – flat YoY up 3.8 percent QoQ;

ASP – Reported USD 500/ m2 – down 16.7 percent YoY – ~flat QoQ;

Shipments – Up 5 percent in area;

Mix – TV 41 percent, monitors 18 percent, NB/tab 20 percent, and mobile 21 percent. Similar to the previous two quarters;

Cash flow – net out 359 billion won (USD 316.9 million); and FX – positive 4 percent.

Q3 comment. Q3 had favorable conditions (shipments and ASP up, currency favorable), but temporary; LCD business to vary from overall display industry; competition from Chinese LCDs is increasing. High value LCD products and profitability witnessed expansion. OLED TV finally contributed to overall profitability. Large panel LCD production is shifting toward commercial (public display) and high-end monitors (+gaming) to avoid new Chinese Gen 10+ capacity.

Displays

Large Area Panel Prices Resume Downward Trend

After a 3-month spate of panel price increases (July–September), ASPs were either flat or down in October. TV panels, which tend to vary between 38 percent and 53 percent of sales for large panel producers, experienced ASPs between flat and down 1.9 percent, 32-inch panels had a 7.1 percent decline as set manufacturers dealt with tightening set margins particular in that panel size. It has been increasingly difficult for set manufacturers who do not have a captive or semi-captive panel source to compete with those who do, and rather than lowering aggregate margins, they have been reducing quotas on 32-inch sets, leaving panel producers with the need to move 32-inch production at lower prices or risk inventory build-up toward the end of the year, a sensitive subject for public companies that must show year-end results.

Korean government to invest USD 500 million in OLED R&D facility

The South Korean government will open an OLED manufacturing facility and research and development center in Cheonan, South Chungcheong Province. The government will invest about 528 billion won (USD 467.8 million) over the next 7 years, the largest-ever for a state-led research and development project in
its effort to promote IT component sectors. The South Chungcheong Province government reported that the OLED display production facility project passed the final feasibility test of the Ministry of Science and ICT.

The government plans to invest 165.1 billion won in the project. The plan includes the building of a four-story panel production facility in a 12,913-square-meter area in Chungnam Techno Park. The facility will house 61 manufacturing and production systems including display evaporation systems. The remaining 363 billion won will be spent on the R&D center. The R&D center will conduct 66 research projects including developing encapsulation methods for flexible OLED panels, devising OLED production cost-cutting stratagems, creating next-generation OLED displays and using OLED technology in novel applications and markets.

TVs

Samsung to introduce 85-inch 8K TV

Samsung Electronics is expected to soon release its first commercial 8K QLED TV in the US (and Korea) in a bid to bolster its share of the super-premium TV market and in the high-end of the premium market. This introduction is about a month earlier than anticipated and the TV is expected to be priced at USD 15,000.

As far back as 2016 the Japanese Public Broadcasting Network, has been offering 8K content to viewers. While at that early date the content was primarily test footage from the 2012 Olympics and it was only in Japan, it could be seen on Sharp 8K professional use TV, but the price was USD 133,000, although a similar 70-inch Sharp professional use 8K set is now priced a USD 73,000. There are only a few content providers who are focused on 8K content. Streaming content provider Vimeohas almost 1800 8K clips that are limited to very short clips of mountains, oceans, cities, and a few very odd music videos.

8K formats (and there are more than one) running at 60 frames/second produce a data rate of 24GB/second uncompressed. A typical new home computer comes with 1TB of data storage space, and at the above rate, that hard drive will be filled in ~41 seconds, although most systems cannot move the data fast enough to meet those specifications regardless of how fast the drive is filled. Compression techniques, which have been used for many years to reduce data rates, will lower those numbers, but data rates and file sizes are still very large and barely manageable even using such algorithms. 

TV brands will sell 8K TV before 8K content is available for upscaling 4K or FHD content, with a basic structure being the duplication of a single pixel across a number of 8K pixels, to sophisticated video processing that can take low resolution pixel information and modify that information for each 8K pixel in a block. The key here is that every TV brand has their own upscaler, just as they were with 4K TV sets, so the major selling point of, it will make one’s lower resolution content look better, is dependent on first, how good the content was to begin with, and how good the upscaler is on the particular 8K TV. TV brands are enamored with 8K TV because:

Numbers. Because 8K TVs are expensive, the sale of a few hundred sets can add substantially to the dollar value of that brand’s high-end share, as a typical low-end Samsung 65-inch 4K TV sells for ~USD 800, so selling 100,000 8K TVs would add USD 1.5 billion in sales, where Samsung would have to sell 1.875 million 65-inch USD 800 4K TVs to generate the same revenue. It allows brands to jockey for share position in such high-end categories, which tend to get press as opposed to statistics on the dollar value of generic 4K TVs.

Premiums. High-end TVs have larger premiums than low-end TVs, and with the intense price competition from Chinese TV brands wishing to expand into world markets, TV set margins are compressed. Encouraging consumers to focus on the premium markets offsets some of that degradation.

Appeal. There are high end-ers and early adopters that like to be first with the best.

The tactic is not new. There have been HDTVs before HDTV broadcasting and now there is 4K without 4K broadcasting. The 8K TVs will be larger and higher priced and will help with profitability and status. Since 2000, every seven to 10 years the TV buying cycle, the size of a TV changed to larger screen. Looking back, the 40~43-inch TVs were the main TV sets in 2000 and the 50–55-inch entered the market in 2010 and in 2012 the 65-inch TV entered the market, the new TV screen max size range will now be 75-inch, 82-inch to 85-inch.

The TV brands believe that the Summer Olympic in 2020 could ignite TV buyers to go purchase large TV with higher resolution. Another factor is the pixel density of its inverse characteristic, the pixel pitch. Having a TV with a pixel density of ~50ppi, might cause the viewer to see space between the pixels.

​Sony ships flagship OLED TV

Sony started shipping its flagship 2018 TV, the OLED AF9, at USD 3499 for the 55-inch model and USD 4599 for the 65-inch model. Sony’s AF9 is a consumer reference-quality OLED TV, available in 55-inch and 65-inch. The 4K WRGB TVs include Sony’s latest technologies, including the X1 ultimate picture processor, pixel contrast booster, and an automated calibration mode. The TVs include a dedicated Netflix calibrated mode. The Android-based TVs also includes Sony’s acoustic surface audio+ (similar to Sony’s 2017 A1E) which means that the TV stand doubles as a high end speaker.

Production

Construction of gen 10.5/11 fabs slowing

China-based flat panel makers, Chongqing HKC Optoelectronics Technology (HKC) and China Electronics Corporation (CEC) both reportedly have held off on their original plans to build 10.5/11G LCD fabs due to concerns of excess capacity leading to questions of financing and return on equity. Foxconn Electronics also scaled back its gen 10.5 LCD fab plans in Wisconsin to a gen 6 fab. The number of gen 10.5/11 fabs that are scheduled to come online during 2018–2021 could be reduced from nine to six. Of the six remaining gen 10.5/11 fab projects, BOE Technology has two. The company’s first gen 10.5 fab located in Hefei, entered volume production in the 1H18. Its second gen 10.5 line, to be located in Wuhan, is slated for volume production in 2020 with a capacity of 120,000 substrates a month.

China Star Optoelectronics Technology (CSoT) plans to build two gen 11 lines, with the first slated to start commercial operations in March 2019 with a capacity of 140,000 substrates. CSoT has signed a contract with the local government in Shenzhen to set up its second gen 11 fab in the southern Chinese city, with plans to ramp up production in 2021 with a capacity of 90,000 substrates.

Sakai Display Products (SDP), a subsidiary of Foxconn, is currently building a gen 10.5 IGZO TFT-LCD panel plant in Guangzhou, China, which is slated to
start commercial operations in September 2019.

LG Display is building its gen 10.5 P10 fab in Paju, Korea. The P10 fab will focus on production of ultra-large OLED panels when it kicks off volume production in 2020, indicated the sources.

Sakai (Sharp) also has an existing gen 10 fab in Japan.

Samsung’s gen 8.5 fab for OLED/QDs to start with 5,000 sheet/month capacity

Samsung is moving forward with its pilot hybrid OLED/QD project, and potentially an USD 8.8 billion investment if the pilot line is successful. The pilot line is expected to be built at Samsung’s display complex in Asan, South Korea, should be ready for production in 2Q19 with an expected capacity of a 5000 sheets/month. The company would then begin conversion of some of their idled LCD capacity to the new process starting in 2020, more specifically the L8 – one gen 8 line, which is a two-phase line with capacity for ~170,000 sheets/month, expected to consist of a 15,000 sheet/month line at the onset, and double the capacity in 2020 and add a further 30,000 yearly substrates in 2021 and again in 2022.

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