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.
Reports from DSCC
OLED equipment spending will rebound in 2020. Display Supply Chain Consultants (DSCC) estimates that the mobile OLED equipment will rebound in 2020 – up 461 percent in fact to USD 8.2 billion, after falling 88 percent in 2019.
In 2020, OLED spending will account for 56 percent of the total display-equipment market spending, basically returning to the levels we saw in 2017-18.
Samsung, Apple and Huawei are the world’s top flexible AMOLED smartphone customers. DSCC has published an interesting note, detailing the world’s top 10 devices by flexible AMOLED sales in the first half of 2019. The list contains only three vendors: Samsung, Apple, and Huawei.
Total flexible AMOLED revenues for these ten devices are almost USD 4.7 billion, and Samsung phones account for 53 percent (USD 2.5 billion). Apple has only two leading models, but accounts for 30 percent of the revenues (USD 1.4 billion) and Huawei phones generated USD 723 million in flexible AMOLED revenues.
Display fab utilization rates. DSCC in its update on display fab utilization rate report says that rigid-OLED production has remained strong since March 2019 (following a low period before) mostly due to a reduced price gap with LCD displays, larger screen sizes in 2019 OLED smartphones, and aggressive smartphone pricing in China.
Flexible OLED fab utilization remains low but DSCC sees an improvement in June to 42 percent up from around 30 percent all over 2019. OLED TV fab utilization remains at very high levels (100 percent, in fact) and may continue to be high.
OLED material market to grow from USD 1 billion to over USD 2 billion. DSCC analysts say that OLED stack materials will grow from USD 1.04 billion in 2018 to over USD 2 billion in 2022 – a CAGR of 17 percent.
DSCC says that up until now, it greatly underestimated Novaled’s revenues. The company generated revenues of USD 97 million in 2017 and USD 122 million in 2018. Novaled is the third-largest OLED material company by revenue, following Universal Display and Merck. The three companies combined will hold a market share of 56 percent in 2023.
LG Display continues to improve its OLED material stack costs, and it will continue to improve its production process and costs. DSCC estimates LGD’s material cost to go down from USD 97.79 per sqm in 2019 to USD 55.22 per sqm in 2023.
OLED production capacity to double by 2023
UBI Research estimates that OLED production capacity will increase from 34.9 million Sqm to 68.5 million by 2023. LG Display and Samsung Display are expected to increase production of OLED TV, and introduce new 10.5-Gen fabs better suited for 65-inch TV production.
The OLED substrate area growth may be attributed to investments made by OLED lines for TVs driven by Samsung Display and LG Display. Currently, OLED manufacturing lines for TVs are 8G lines optimized for 55-inch panel production. However, the demand for premium TVs is shifting from 55-inch OLED TVs to 65-inch TVs. By 2021, the 65-inch OLED TV market will account for more than 40 percent.
In response to these market conditions, LG Display is preparing to invest 10.5G lines in the most efficient production of 65-inch panels. In 2023, the substrate area of a large OLED line is expected to occupy 42 percent of the total substrate area.
The substrate area of the 6G line is expected to grow to 13 million sqm this year and to 19.3 million sqm in 2023. Most of this is due to investment by Chinese panel makers. In China, the smartphone market accounts for about 40 percent of the global market, so Chinese smartphone makers have a very high market share based on the domestic market. Huawei has recently become the world’s second-largest shipper based on its domestic market. Chinese panel makers are boldly adding a 6G flexible OLED line to Chinese smartphone makers, with the Chinese government’s huge support.
In 2019, Korea’s OLED production capacity (substrate area) will total 27.9 million sqm, accounting for 80 percent of its total production capacity and expanding to 54.8 million sqm by 2023. The market share will remain at 80 percent and lead the OLED industry.
Chinese panel makers are expected to stay at around 20 percent as they are investing only in OLED production lines for mobile devices. UBI Research estimates the OLED manufacturing equipment market (excluding logistics equipment) at USD 28.4 billion for four years from 2019 to 2022 due to investment by Korean and Chinese panel makers. Among them, the sixth-generation equipment market could account for 61 percent of the total equipment market, at USD 17.2 billion.
Mobile OLED production capacity will also grow, but at a slower rate – from 13 million sqm in 2019 to 19.3 million sqm in 2023, mainly driven by Chinese OLED producers that produce flexible smartphone OLED displays, mainly for the Chinese domestic market. Korean OLED producers (SDC and LGD) will continue to dominate the market and will retain their ~80 percent market share in 2023.
Interestingly UBI estimates that Chinese makers will not start producing large-area OLED panels by 2023. This is an interesting projection as some Chinese OLED makers do have active OLED TV development projects, mainly based on inkjet printing processes (for example, CSoT/TCL and BOE).
UBI estimates the OLED manufacturing equipment market at USD 28.4 billion in the four years from 2019 to 2022. 6-Gen equipment used for mobile OLED production will account for 61 percent of the market.
However, this could change, and OLED production in Korea could be halted by the end of August due to Japan’s restriction of free exports. The Japanese government has taken a decision to restrict some material exports, including fluorinated polyimide, to South Korea, following a diplomatic tension between the two countries.
Polyimide is required for OLED production, and Japan controls about 90 percent of the world’s production. According to a new report from Korea, Samsung and other companies have warned the Korean government that production in some plants could be halted as early as by the end of August, if these materials are not available. It is not clear what is the situation of Samsung’s (and LG’s) OLED production.
In another report from Korea, it is suggested that LG Display will at least be able to go around these sanctions with its Guangzhou OLED TV fab in China – although production is only expected to begin now during the third quarter of 2019 and even so it will harm LGD’s plans to increase production capacity in 2019 if its current OLED TV fabs will have to halt production. In addition, it is not clear whether these materials are actually used in OLED TV production (or only in flexible OLED production).
The Japanese government decided on these new restrictions following a decision in Korea that Japan’s Nippon Steel must compensate Koreans for forced labor during World War II while Japan says that this issue was already settled in 1965. Japan removed Korea from the countries it allows free exports to, which means that in order to export to Korea, Japanese material makers will need to apply for export permission, which could delay shipments by 90 days.
South Korean company charged with leaking secrets to China
South Korean prosecutors indicted a group of 11 executives and employees of Korea-based Toptec, a Samsung Electronics supplier, accusing them with leaking Samsung’s flexible OLED technology to Chinese display makers. The group includes Toptec’s president and managing director.
According to Nikkei Asian Review, the Toptec’s executives supplied the stolen information to four companies in China, including BOE and CSoT. The cost of the information was 15.5 billion won – or almost USD 14 million. Toptec produces display production automated equipment.
This is the latest in a long series of Korean OLED technology leaks to China. In June 2018, the South Korean prosecution indicted several officials that allegedly tried to sell Samsung’s OLED technology secrets to China. These officials include Korean and Chinese researchers – and also a professor at a national Korean research institution. In October 2018, it was reported that critical information regarding OLED technologies and plans has been leaked from LG Display’s headquarters – and that the company suspects espionage from Chinese-based companies.
In May 2012, employees at Israeli company Orbotech’s local Korean branch were accused of leaking OLED technology form, both LGD and SDC, to several Chinese and Taiwanese companies. But it is not just Chinese companies that try to access protected OLED technology – in 2012 LGD was charged with stealing OLED secrets from Samsung Display as well!