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Musings From An OLED Advocate

Musings From An OLED Advocate

Sales of OLED TVs surpassed those of QLED. The trend is a result of strong showings by OLED versus QLEDs in head-to-head matchups and the adoption of OLED by ~15 brands around the world.

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

UDC and Visionox link up in long-term license agreement

Universal Display Corporation (UDC) and Visionox Technology, Inc., have signed a new OLED technology license agreement and supplemental material purchase agreement. Under the agreements, UDC will supply phosphorescent OLED materials to Visionox Technology for use in its products through its wholly owned subsidiary UDC Ireland Limited. Details and financial terms of the agreements have not been disclosed. UDC now has 35 agreements with firms involved in OLEDs, eight of which are long terms for the production of OLED displays.

Xiaomi’s IPO to be divided between CDRs and shares on the Hong Kong exchange

Xiaomi is valuing the company at between USD 60 billion and USD 100 billion in an IPO, despite the loss of USD 1 billion in Q118. Xiaomi Corp is considering raising about half of its proposed USD 10 billion IPO from Mainland Chinese investors, people familiar with the matter said. The company may seek about USD 5 billion from the sale of Chinese depositary receipts (CDR) and a similar amount from selling shares in Hong Kong. The split will depend on demand in the two markets and may change before the IPO. The company is targeting a valuation of about USD 75 billion although that number could also shift. Xiaomi’s IPO, the largest since Alibaba’s 2014 debut, comes as China accelerates a push to attract more blockbuster listings through CDRs that enable a version of the shares to be traded on domestic exchanges. Selling more equity to local investors aligns Xiaomi with Beijing’s policy goals and helps it command a higher valuation. JPMorgan, Morgan Stanley, and CLSA – all of which are sponsoring or arranging the IPO – put Xiaomi’s price tag at anywhere from USD 65 billion to USD 100 billion depending on the metrics used. The share sale will be used to fuel expansion beyond China and bankroll the development of devices and media services.

Xiaomi’s top-line growth is offset by thin and volatile profitability. China is still developing the final rules for CDRs and raising half the money through such securities would represent a much larger proportion than expected. Reuters reported earlier that the company planned to sell about 30 percent of the stock to mainland investors. In its CDR prospectus, Xiaomi said it plans to use about 40 percent of the proceeds to enlarge its global footprint. Xiaomi reported a 7 billion yuan (USD 1.1 billion) net loss on revenue of 34.4 billion yuan in the first quarter.

“In 2018, the company plans to enter or consolidate positions in Southeast Asian and European markets,” Xiaomi said in its Chinese prospectus, which did not mention a fundraising target. It opened its first store in Paris in May 2018, while Senior Vice President Wang Xiang has said multiple times that the company is looking to sell smartphones in the United States of America and compete against Apple Inc. Led by billionaire co-founder Lei Jun, the company’s IPO would be the world’s largest first-time share sale since Alibaba Group Holding Ltd. listed in the United States of America in 2014. The IPO is jointly sponsored by banks including CLSA, Goldman Sachs, and Morgan Stanley in Hong Kong and CITIC Securities in Mainland China.

The company saw sales from more lucrative smart home devices and internet services grow as a proportion of overall revenue in the first quarter. Roughly 31.8 percent of Xiaomi’s revenue in 2018’s first 3 months came from products such as air purifiers and scooters and online services such as mobile apps, according to the filing. Those two segments contributed 29 percent of sales in 2017. Its biggest business, smartphones that barely make a profit, declined in importance to just 67.5 percent of sales from more than 70 percent in 2017. It made a profit excluding one-time items of 1.038 billion yuan in the first quarter.

TVs

LGD increases its TV brands targeting 3 million units in 2018

LG Display is planning to increase its production to 3 million units this year. Last year, the company produced approximately 1.7 million units and is using its Gen 8.5 fab in Paju, South Korea while preparing to produce similar panels in Guangzhou, China, which has been burdened by lack of cooperation from local government agencies. OLED TVs were produced by a small number of brands including LG Electronics, Konka, Skyworth, and Changhong. Last year, however, Sony joined the ranks. At present, the number of large OLED TV manufacturers is 15, including Panasonic, Philips, Loewe, Metz, Vestel, and Toshiba. Sharp is also expected to follow suit, too. The OLED TV supply totaled 602,000 units in the first quarter of this year and is estimated to reach 673,000, 743,000, and 804,000 in the remaining quarters of this year, respectively. But the large OLED TV manufacturers are trying to increase volume by marking down their prices.

For example, the prices of new products of Sony and Panasonic are 20–30 percent lower than those of their products released last year. LG Electronics recently lowered the price of its 55-inch OLED TV from USD 4000 to USD 2500. The Loewe’s Bild 3.65 is a 4K HDR OLED with a built-in soundbar and a £4290 price tag. In Australia, Loewe’s latest OLED television – the Bild 3.65 – will be hitting stores soon. Hisense made a big deal out of its QLED TV, which it originally claimed was equal to an OLED. But the market told them something different and LG Display has recently started supplying OLED TV panels to Chinese TV maker Hisense that is widely rumored to launch its first OLED TV in the third quarter on June 11, according to industry sources. Amid falling LCD prices, the Korean display maker has been seeking to diversify its clientele for OLED TV panels. The firm, along with its sister unit LG Electronics, is betting big on the burgeoning OLED TV market to compete against the Samsung Electronics-led premium LCD TV market. LGD is hoping to break-even on its OLED TV business for the first time, since it started production and has been trying to increase panel prices, even as TV prices drop.

QLEDs trending downward, OLEDs up

Sales of QLED LCD TVs are on a downward trend, whereas sales of OLED TVs are trending up. For the past two consecutive quarters, sales of OLED TVs surpassed those of QLED. The trend is a result of strong showings by OLED versus QLEDs in head-to-head matchups and the adoption of OLED by ~15 brands around the world. In April 2017, in response to the growing strength of OLED TVs, Samsung, TCL, and Hisense formed the QLED Alliance. However, the group appears to be falling apart as Hisense announced it would launch its first OLED TV later this year. Samsung has also resumed development of OLED TVs, although the exact nature of the technology design is not yet set. Business Korea noted that in the first quarter of 2018, sales of LG OLED TVs grew 124 percent y-o-y as compared to sales of Samsung QLED LCD TVs that plummeted 45 percent y-o-y.

Displays

BOE CEO expects consolidation in the display industry

The crystal cycle appears to be alive and well and one of the results of reaching the period of excess capacity is lower ASPs and in the most severe situations, consolidation, which is expected to take place in the global FPD industry as the number of major players is likely to be reduced to less than five, according to BOE chairman Wang Dongsheng. Wang made the remarks at the company’s annual shareholders meeting held in Beijing recently, and claimed that BOE is currently the world’s top panel supplier for smartphone, tablet, notebook, and monitor applications thanks to its continued capacity ramps in the recent years. BOE leaped one step further to outrace LG Display and Samsung Display to become the largest TV panel vendor globally in the first quarter of 2018, with its TV panel shipments reaching 12.5 million units. BOE also ushered in the 10.5G era for the global FPD industry by kicking off commercial production of the world’s first 10.5G line in March 2018. More 10.5G lines will come online every year from 2018 to 2020, Wang indicated. He believes after the current round of consolidation that fabs smaller than 7.5G lines will be phased out by the market. While acknowledging that flat panel plants, particularly those that are still using a-Si technology, will face the threat of being shut down, some sources from Taiwan’s FPD industry believe that the below 7.5G lines may not be completely retired within the next 5 years.

For example, Taiwan-based HannStar Display has only one 5.3G line. Although the company posted revenues of only NTD 23.7 billion (USD 793.95 million) in 2017 compared to BOE’s CNY 93.8 billion (USD 14.62 billion), its gross margin for the year reached 36.4 percent, which was higher than those for most of its rivals. China-based Infovision Optoelectronics was profitable in 2017, utilizing its single 5G fab to roll out small- and medium-size panels exclusively for notebook applications. Chunghwa Picture Tubes (CPT) still managed to kick off volume production of a new 6G fab in China in 2017 although the company has been operating in red for nine consecutive years. In line with the advent of a new technology era to be built on the 5G, AI, and IoT industries, small-scale panel makers are advised to develop niche-market products leveraging their own expertise, technology, and capacities, as display products will remain the primary human-machine interfaces in the new era.

Production

Chinese government to approve a LG Gen 8.5 OLED fab in Guangzhou

In January the Korean government had given approval to LG Display toward the construction of a Gen 8.5 OLED TV panel fab in Guangzhou, China. That approval, which was contested by various governmental officials, would allow LG Display to take their expertise in producing OLED TV panels and transfer it to a new fab in China. China and South Korea have been at odds over intellectual property issues in the display space for many years and for good reason, as years ago Chinese entities bought a South Korean Display firm Hydis, and within a few years stripped the company of it display IP and let the company fall into oblivion by withholding promised funding. Still left in the process for the construction of LG’s USD 6.7 billion fab project is approval by the Chinese government, which one would assume would be easily obtained. China is now expected to approve LG Display’s plan to build an OLED display production facility in the southern Chinese industrial city of Guangzhou, in the first week of July, a senior executive familiar with the matter told The Korea Times. “China is closing in on a go-ahead sign to okay LG Display’s proposed OLED facility construction plan in Guangzhou in July,” the executive said.

“LG Display has addressed key pending issues with Chinese authorities.” He said the approval would be conditional as China hopes to help its homegrown display firms remain competitive through close partnership with LG Display. He said the principal reason for delays in approval of the plan filed with Chinese authorities is due to procedural issues, saying China has never demanded that LG transfer its advanced OLED technology in exchange for the approval. Earlier, Korea’s trade ministry had approved the company’s plan to invest up to 7.4 trillion won (about USD 6.7 billion) to build a new OLED plant, with the LG Group display affiliate applying an advanced 8.5-generation glass-cutting technique there, to push forward with its OLED-focused growth strategy.

The Guangzhou fab itself is expected to be a Gen 8.5 large panel OLED fab with a fully built-out capacity of 60,000 sheets/month or a 2.16 million units/year run rate for 65-inch OLED TV panels at 100 percent yield. The fab is expected to begin production in early 2020 (phase-I) and grow to under 500,000 panels in the first year. LG is also planning to build a Gen 10.5 fab in Paju, which will be an all-OLED facility reaching 45,000 substrates/month. Previously, it was reported that the fab would start with a split between OLEDs and LCDs, but those plans have been shelved.

ChinaStar reveals Gen 10.5 details

CSOT has been calling its next TV fab a Gen 11, but when Ashai Glass described their supporting glass factory, the size was 3370×2940, which is commonly known as Gen 10.5. On the difference, Ashai claimed it was just the way CSOT chose to label their fab, since the size was what was commonly called Gen 10.5.

On May 25, TCL, the parent company of ChinaStar committed to a new USD 9.3 billion fab in Shenzhen, China. The fab (tentatively called T7) had a substrate size of 3370×2940 and a capacity of 90,000 sheets/month when fully completed. At the time, TCL noted that the fab would be producing both ultra-large LCD TV panels and OLED TV panels, but little other information was specified. TCL has since revealed the new fab will be the company’s second ultra-large fab as they are currently building their first Gen 11 fab. The split will be 70,000 for LCDs and 20,000 for OLEDs. The OLED will use amorphous oxide backplanes, and initially they will use an in-line vapor deposition system, until such time as they have productized IJP. ChinaStar is working with a number of partners, including Chinese panel producer Tianma, ink-jet tool developer Kateeva, and OLED material suppliers Merck, DuPont, and Sumitomo. The fab is expected to be operational in 2021, and CSOT expects to have ink-jet printing for large panel OLEDs within 3–5 years. The primary rationale for using IJP is to reduce costs as material urtication is expected to be 90 percent versus the in-line rate of 60 percent. However, since the in-line VTE process does not pixelate the material, it also uses more emitter material in general.

Should ChinaStar figure out ink-jet printing for large panel OLED displays, it would be a game changer for the display industry and would have a profound effect on the OLED supply chain, particularly the tool vendors and material suppliers.

Foxconn sets up US HQ in Milwaukee

Taiwanese electronics manufacturer Foxconn will establish its North American corporate headquarters in Milwaukee, Wisconsin, following the purchase of a building in the city’s downtown area. The announcement comes almost a year after the company disclosed plans to invest USD 10 billion over 4 years to build a 20 million-square-foot LCD panel plant in Wisconsin that could eventually employ up to 13,000 people.

VR/AR

Microsoft to unveil HoloLens 2

Microsoft is planning to unveil its HoloLens 2 headset later this year reported The Verge. The HoloLens 2 headset, codenamed Sydney, will include an improved field of view, and will be a lot lighter and more comfortable to wear. Microsoft is also reducing the cost of the headset significantly, to drive business adoption. Microsoft has been testing future versions of its HoloLens headset with an ARM-based processor inside that should boost battery life. Google is also reportedly building its own ARM-based augmented reality headset. The HoloLens 2 will also include Microsoft’s latest generation of the Kinect sensor, and a custom AI chip to improve performance. Microsoft is also targeting sales of the HoloLens 2 for 2019, and the company is apparently on track to hit this target.

Microsoft’s next HoloLens will also include a variant of Windows 10, similar to the existing headset, and designed especially for its mixed reality use cases. It is part of Microsoft’s clever modes for clever hardware plans, alongside the Surface Hub 2 and a potential surface-branded notepad device (codenamed Andromeda).

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