Panel makers are investing heavily in production sites for OLED panels, anticipating growth in demand from television and smartphone makers. They are realizing that profitability from LCD displays may eventually erode, and are therefore betting on OLED displays.

OLED industry, entering a huge capacity-growth phase, is estimated to reach total market size of USD 42.115 billion by 2021 with a CAGR of 14.83 percent over the forecast period 2017–2021. OLED technology is being increasingly preferred on account of the advantages it offers in a higher power efficiency, lighter weight, and reduced size as compared to LED/LCD.

One of the primary drivers for this market is the rise in demand for thin displays. The growing demand for thin displays is predominantly seen in the TV and smartphone application segments, which constitute the largest share of the application. In terms of geography, APAC will dominate the supply market for the next few years. This dominance in the global market may be attributed to the low cost of labor and raw materials in countries like China and South Korea. The local Chinese companies are in an advantageous position as they receive large financial funding from the government, and are able to divert large funds into OLED panels manufacturing. Chinese OLED manufacturers believe that OLED display technology will soon replace TFT-LCD display panels. This has resulted in the increase in the number of manufacturing plants of both the end users and manufacturers of OLED displays. 

Manufacturers are focusing primarily on technological advancements rather than aggressive market penetration. Consequently, they are constantly expanding in the field of OLED displays, such as foldable and bendable OLED displays for smartphones and tablets, transparent displays for augmented reality (AR) and virtual reality (VR), ultra-micro displays for smart rings and other wearable devices, and large displays with 8K resolution. 

Shift to OLED Production

Panel makers are investing heavily in production sites for OLED panels, anticipating growth in demand from television and smartphone makers. They are quickly realizing that profitability from LCD displays may eventually erode, owing to growing capacity and price competition between South Korea, China, and Japan, so they are betting their future on OLED displays.

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LG Display. The company is considering further investment for OLED for TVs. The company is likely to focus more on  Gen 8.5 OLED for now, rather than the latest Gen 10.5 considering related equipment and technologies have not yet been fully tested. The company announced at its 2017 Q1 financial call that 70 percent of its CapEx will go to large-sized OLEDs and flexible OLEDs, with the proportion of flexible OLED higher than that of large OLEDs.

Samsung Display. The manufacturer has applied for final approval from the city of Asan in South Korea to start construction of another OLED fab. The company is ready to begin construction as soon as approval is received. The project is expected to cost between USD 7 billion and USD 11.4 billion. The capacity of the new plant could be as much as 135,000 sheets per month, as it would be a duplicate of the Samsung A3 line’s 135,000 sheet per month capacity specs. Based on a 12 to 14 months construction plan and a 3-month equipment delivery and tune-up schedule, the fab could start its first line in October 2018. When the fab opens, it will be producing on a limited basis, but Samsung Display’s ramp schedules are the shortest in the display space, and A4 will be a significant contributor to Samsung Display’s OLED capacity in 2019 and will add over 1 million aquare meters to Samsung Display’s raw OLED capacity when fully built out.

BOE Technology. BOE has aggressive plans for building their OLED production capacity with three projects in planning, construction, or expansion modes. The three OLED fabs include a Gen 5.5 three-phase mixed-rigid and flexible LTPS OLED line in Ordos, Inner Mongolia, a three-phase Gen 6 rigid LTPS OLED line in Chengdu, and a Gen 6 LTPS flexible line in Mianyang. The Ordos line has been in operation (Phase-I) since late 2015. The Chengdu line is expected to begin production in the near-term. The Mianyang fab is scheduled for July 2019 (Phase-I). The Chengdu line is building at a cost of more than USD 5 billion. BOE received financing from the Hefei City government to set up a JV that will focus on the production of OLED TV panels through the use of ink-jet printing. The project, which is expected to cost USD 117 million (75 percent BOE and 25 percent city government), will be located at the company’s Hefei city location where they already have Gen 5.5 and Gen 6 lines, and are constructing a Gen 10.5 line scheduled to open in May of 2018. The company also has a Gen 8.5 pilot line, which is used to research manufacturing processes for OLED, and would likely be the area where the JV would be adding the new JV tools.

China Star. It is expected to build another Gen 10.5 capacity in Wuhan. China Star is also building a two-phase Gen 11 fab in Shenzhen, which is said to be oriented toward both LCD and printable OLED displays. The fab is expected to enter production in Q2 2019 and a second Gen 11 fab is expected to be built alongside the one currently under construction. The fab is expected to have a total capacity of 45,000 sheets per month, built out in two phases with 15,000 per month for LCDs and 15,000 per month for OLEDs that will be expanded by another 15,000 per month in 2020. The company is also exploring the use of ink-jet printing to reduce the cost of large-size OLED displays.

Others. AU Optronics (AUO) will add capacity to its Gen 8.5 fab in Taichung to augment its ultra-large TV panel production capabilities. Huaxing Photoelectric Technology has already started a facility in Wuhan, Hubei, China. Tianma 

Micro-electronics has also converted its TFT-LCD plant in Wuhan into an OLED facility. Hehui Photoelectric, Visionox, and other companies have also built new units. Chinese start-ups have also started investing in OLED technology; for example, Royole did an investment of 300 billion Japanese Yen with the help of government support. Kateeva has doubled its manufacturing space to facilitate the production of its OLED ink-jet encapsulation tool and potentially to build out production of an ink-jet tool for OLED stack materials. Sharp will invest 

USD 570 million and build OLED pilot lines at its plants in Osaka and in the Mie Prefecture. The pilot lines will begin OLED production in the summer of 2018.

Outlook

Almost all of the new OLED factories in China, South Korea, and Japan plan to produce flexible, plastic-based displays. Most of these new factories are adopting highly complicated, high-mask-count LTPS-TFT processes that require more high-resolution exposure lines and other supporting equipment. FPD equipment makers are scrambling to ramp-up capacity to meet customer demand and take advantage of the best sales opportunity ever. OLEDs represent a new generation in display technology. They will expand quickly as OLED has emerged as the driving force of next-generation display that will succeed LCD.

Kim Sang Don

“The specific size and timing of the investment is under review, but investing more than 70 percent of our CapEx in OLED remains unchanged. Since OLED investment costs are high, we will deeply examine the confidence of our customers and the certainty of market demand, and will invest in a conservative position. OLED lighting capacity will be 15,000 sheets per month in the second half of 2017, and flexible OLED will begin to be mass produced in Gumi E5 at the end of Q2 2017. The reaction to OLED wallpaper TV and Crystal Sound OLED, released at CES 2017 in January this year, is better than expected. We had OLED TV shipments of 300,000 units in Q1 and expect 500,000 units in each quarter of the second half of this year.”

Kim Sang Don
CFO,
LG Display


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