OLED production - Page 24

According to Business Korea, LG Display is likely to start investing in its P10 10.5-Gen OLED TV fab in Paju by the end of the month (Q1 2019). Total investment in the P10 production fab is estimated to reach almost $10 billion.

LGD was supposed to start ordering equipment for the P10 line towards the end of 2018, but the company delayed these plans - according to an earlier BK report, LGD delayed the P10 fab in late 2018 as it found the shift to new 10.5-Gen substrates more challenging than it earlier expected, and in addition it wanted to focus on its upcoming 8.5-Gen line in Guangzhou first. Apparently LGD is now ready to start building the P10 line.

DSCC has updated its OLED market forecast for 2019, and the company now expects OLED revenues to reach $28.6 billion (up from $26.5 billion in 2018 - but lower than DSCC's previous estimate). In terms of area shipments, 2019 will see a 25% increase compared to 2018, with strong growth in both the TV and smartphone market.

Looking at OLED applications, TVs will have a market share of 42% in terms of area production, but only 9% in terms of revenues. All OLED production will reach 572 million units, growing by 16% compared to 2018.

DSCC says that in January 2019 flexible OLED utilization rates dropped to 39% - due to seasonal weakness and Apple's slow iPhone sales. CLSA says that February will another bad month and utilization rates will even drop slightly to 37%. In March things will improve to almost 50% - following the launch of Samsung's Galaxy S10.

Looking at the entire quarter, DSCC sees utilization rates dropping from 68% in Q4 2018 to 41% in Q1 2019. Glass input for all flexible OLED fabs will be down 3% from last year. Rigid OLED utilization rates have been up in 2019 - from 44% in December 2018 to 49% in January 2019, and DSCC sees it continuing to climb in Q1 2019, as a result of increased adoption of rigid OLED by Chinese smartphone makers.

CLSA released an interesting investment note and details Samsung Display's 2019 plans and expectations. Samsung's A3 flexible OLED line suffered from low utilization (52% in 2018) and Samsung hopes to improve this to 70% in 2019. Samsung shipped 145 million flexible OLEDs in 2018 and aims to sell 215 million in 2019 (a 48% increase).

In 2018 Samsung shipped 7 million flexible OLEDs to Chinese phone makers, and it aims to increase this to 40-45 million in 2019 (CLSA is skeptical of Samsung's ability to meet its target - even though the company seeks to cut its prices and offer volume discounts and offer the lower specification panels to mid-range smartphones). CLSA sees SDC's average flexible OLED price declining 15% in 2019.

LG Display reported its financial results for Q4 2018 - it reported an operating profit of ₩279 billion ($250 million USD) due to strong shipments of IT panels and OLED TVs. LGD however gave a weak outlook to 2019 (for its LCD business).

LGD says that it will invest $7.1 billion in 2019 in capacity expansion, and $3.5 billion in 2020. It will divert all of its investments into OLED displays - with 60% going to large area OLED TV production and 40% going to small/medium pOLED production.

DSCC released its cost and prices estimates for Samsung's smartphone OLEDs. For rigid OLEDs production costs range from $23 for a 5.5" FHD AMOLED to $32 for a 7.21" 2244x1080 one (see chart below). For some of its rigid OLEDs, SDC enjoys a high operating margin of 30%.

Flexible OLEDs are of course much more expensive - a 5.5" 2560x1440 panel costs almost $70, while a 6.46" 2688x1242 panel costs around $90 (as can be seen in the chart below). As in rigid OLEDs, the larger displays have a higher operating margin (up to 26% for the 6.46" panel).

You can compare DSCC's production costs estimates with the recently released IHS production costs here. IHS estimates a 5.7" rigid OLED at $18.62 (DSCC: 5.8" at $23) and a 5.8" flexible OLED at $22.61 (DSCC: 5.5" costs $70 - that's quite a difference!).

DSCC says that Samsung's foldable 7.3" 2152x15236 AMOLED panel (the one that will be used by Samsung's first foldable OLED device) currently costs almost $180 produce (and SDC will actually lose a bit on every panel sold).

SDC will be able, though, to quickly lower its production costs which will reach around $90 for each panel in 2022. Cost reductions will enable SDC to maintain a good profit margin on these foldable displays from 2020 onwards. The main reason for the current high prices are SDC's low yields on foldable AMOLEDs.

DSCC says that the upcoming Samsung Galaxy S10 will come in three models:

• The Galaxy S10 Light will use a 5.75" 2340x1080 flexible AMOLED display
• The Galaxy S10 will sport a 6.11" 3120x1440 flexible AMOLED
• The Galaxy S10 Plus will sport a large 6.44" 3120x1440 flexible AMOLED

DSCC also details the production cost and panel price at SDC, for the large GS10+ 6.44" AMOLED display - and how it changed from Q1 2018 (with a forecast of up to Q4 2019).

Market research firm DSCC says that BOE managed to dramatically increase its yields - which have tripled to over 30% by the end of 2018. The company is expected to continue and improve its yields which will reach, according to DSCC, to almost 60% by the end of 2019.

The increased yields enabled BOE to increase its flexible OLED production at its first B7 line from 125,000 units per month in Q3 2018 to almost 1 million panels per month in Q4 2018. BOE's main customer is Huawei - with its Mate 20 Pro. The increased yields means that panel production costs are falling - and DSCC actually expects BOE's production costs to fall below SDC's by the end of 2019 as BOE's fab costs are subsidized - as can be seen in the image below.

Samsung Display announced that it will start mass producing its new 15.6" UHD (3840x2160) OLED display panels in February 2019. SDC is targeting premium laptops, as these ultra high resolution panels are optimized for gaming, graphic design and video streaming.

At CES we saw three companies that announced 15" OLED laptops - HP with its Spectre x360, Lenovo with the Yoga C730 and Dell with the XPS 15, Dell G7 15 and the Alienware m15. It is likely that at least some of these laptops will start shipping in March 2019 when SDC can start supplying the panels.