In 2022 several Big Display stories as well as their implications are likely.
The first event that could have far reaching implications across the display industry is if Samsung Visual Display and LG Display, the only OLED TV panel supplier, reach an agreement on both OLED and TV panels. The expectation is that Samsung will purchase 1.5M-2.0M OLED TV panels and 4.0M-5.0M LCD TV panels from LGD in 2022.
Who are the winners and losers? LGD would likely be the largest winner as they can claim that they are the developer of the leading TV technology with all major brands adopting WOLEDs for their high-end TVs. I believe all leading brands will now have OLEDs in their line-up except for TCL. Without a capacity increase, it will result in tighter supply and higher utilization and higher prices than without this agreement. As a result, OLED TV panel prices should fall significantly less than LCD TV panel prices and could end up rising for the year. It may also create interest among Chinese suppliers in licensing LGD’s WOLED technology to meet the strong demand enabling LGD to earn a royalty per display which could boost their revenues and margins. LGD has reportedly tried to license its WOLED technology to Korea in the past, but it was rejected by the Korean government. It will also spark more talk about LGD adding WOLED capacity, which they can do at their G10.5 project in Korea, their existing OLED fab in China or they could convert more LCD fabs in Korea. There is no clear indication yet what they plan to do for additional capacity, however, their equipment supply chain would be another beneficiary.
Samsung VD is also a winner as they can take share back, lost to leading OLED TV brands LG and Sony. We think the Samsung brand is big enough to sell all TV technologies. It can afford to be technology agnostic and sell all leading high-end technologies. It also gives Samsung VD more time to evaluate the prospects/competitiveness of SDC’s QD-OLED technology and will boost its OLED TV panel output beyond what SDC is capable of from its single 30K/month line, which will also sell TV panels to Sony and monitor panels to Dell. It also puts VD in a stronger negotiating position when looking to buy QD-OLED or WOLED panels, but both technologies will likely be supply constrained in 2022. Whether this deal goes beyond 2022 is certainly a question, but we would expect it to be extended for many years. The LCD agreement also ensures Samsung can shut down its LCD TV panel business while maintaining a domestic source of supply.
Losers will likely consist of:
- MiniLEDs – Samsung’s WOLED volumes will likely come from Samsung’s MiniLED volumes unless they can move MiniLEDs to the mid-range faster than expected. However, we are hearing that they will position MiniLEDs at 8K and priced even higher than WOLEDs, so it doesn’t look like MiniLEDs will hit mainstream pricing from Samsung in 2022.
- Chinese/Taiwanese panel suppliers – With LGD expected to supply 4M-5M LCD TV panels to Samsung in 2022, that will come mostly at the expense of Chinese and Taiwanese panel suppliers. They are also likely to lose MiniLED volume growth at Samsung in 2022.
- Other OLED brands – Samsung’s share will inevitably come at the expense of other leading OLED brands such as LG, Sony and Panasonic. LGD will need to work round the clock to meet all these companies’ volume requirements, but inevitably Samsung’s additional volumes should come at the expense of other brands. To help manage this situation, we believe LGD may be building some inventory in advance of Samsung entering.
The second event that could have far reaching implications is if SDC issues POs as expected in early 2022 for the world’s first G8.5 RGB OLED fab using scaled up FMM VTE tools and IGZO backplanes. This fab should give SDC a significant advantage in IT markets with the potential to be applied to both larger and smaller displays. Samsung Display would be a big winner, giving them a first mover/cost advantage in IT markets, allowing them to sustain their dominant share in OLED notebook PCs and extend it further into monitors, tablets and other applications. Their OLED competition will mostly be offering G6 flexible LTPS/LTPO rigid + TFE panels, which will be at a significant cost disadvantage vs. an oxide G8.5 rigid + TFE fab. It will also help them stay cost competitive against MiniLEDs, as MiniLED costs inevitably fall and will likely enable them to run the fab at much higher utilization as they can access several large end markets in one fab similar to G8.5/G8.6 LCD fabs. What will be critical for them, will be to solve the FMM VTE scaling issues. ULVAC is rumored to have solved this issue and is believed to have an exclusive agreement with SDC for FMM VTE tools, making ULVAC another big winner here. They are expected to take significant share from Canon Tokki in the FMM VTE market.
Another winner is expected to be SDC’s equipment supply chain due to significant capex from SDC. We expect the spend per 15K G8.5 oxide/FMM rigid + TFE fab to be 15% – 20% more than G6 flexible OLED lines. If these lines are ultimately used for TVs, SDC and others would need significantly more CapEx to meet OLED TV demand resulting in a massive surge in OLED CapEx like what we saw in 2016-2017. It would also give SDC another OLED TV technology option which should be lower cost, higher resolution and higher brightness than their QD-OLED technology.
Losers here would be competing OLED panel suppliers who are likely to fall further behind SDC in OLED IT. It may also cause China Star to change their RGB IJP OLED strategy. Certainly, it could cause Canon Tokki to lose their large lead in FMM VTE tools. It could also reduce interest in specialized LTPS equipment such as ELA, implant and furnace equipment. Also, with the fab expected to use rigid + TFE equipment, it would impact PI coating/curing equipment and LLO equipment suppliers.
Some other expected display related stories in 2022 are how far will LCD prices; news on SDC and LGD ending LCD panel production in Korea; rate of price declines in MiniLED panels; more consolidation in China – BOE and HKC, BOE and Visionox? and MicroLED progress.