TrendForce’s latest report, “AMOLED Technology and Market Status”, reveals that OLED, the next generation of digital displays, has not only taken hold of the smartphone market but is also beginning to make its move into other applications. Organic OLED materials are the core of the industry supply chain, accounting for 23% of the cost of making smartphone panels. An increasing penetration rate has allowed the global value of OLED materials to be estimated at US$2.23 billion in 2022, with a YoY growth rate of 30%. Production values are expected to reach US$3 billion by 2025, owing to the support of manufacturers.
OLED light-emitting components are either based on polymers or small-molecule materials. Polymers have poor solubility in organic solvents, which results in impure color and poor film uniformity. However, when combined with printing technology, the high aperture ratio can fit more materials and compensate for the poor lifespan and efficiency of polymers. Small-molecule materials have purer color and exhibit higher brightness, which can be applied to larger-generation OLED production. However, they are currently limited to developing FMM and vapor deposition machines.
OLED production begins with synthesizing intermediates from raw monomers. Then, the intermediates are processed to become precursors before finally being sublimated and purified into terminal OLED materials. When raw monomers are synthesized chemically into intermediates, there’s a gross margin of about 10–20%. These are mainly supplied by Chinese manufacturing companies such as Jilin OLED Material, Ruilian New Materials, Aglaia Tech, and Shenzhen Mason. Terminal materials are produced via sublimation and purification and their structure will not change through subsequent production. Therefore, the chemical structure, processes, and formulas are essential to trade secrets for terminal material manufacturers. The purity of these materials after sublimation is expected to be very high, meaning that technological barriers are also very high, allowing for gross margins as high as 60–70%. The technology and patents are concentrated within a few foreign manufacturers. However, the booming market has led to an influx of upstream manufacturers, gradually breaking down past technological barriers. Some Chinese manufacturers have been able to achieve mass production of precursors and terminal materials, and are now actively competing in the supply chain and driving growth.
Apart from two electrodes, the structure of an OLED component consists of organic light-emitting materials, including the main host (light-emitting layer), guest material (dopant), and functional layers (with electron or hole transport properties). DuPont and LG Chemical are the major manufacturers of red OLEDs, while Samsung DSI and Merck mostly produce green OLEDs. UDC has a monopoly on red and green phosphorescent dopant materials due to patent barriers. Blue light-emitting materials used to be primarily supplied by Idemitsu Kosan and Merck. Recently, LG’s next generation OLED evo TV uses deuterium-based blue emitter materials—supplied by DuPont and LG Chemical—to improve blue light-emitting efficiency. Its precursors are supplied by Ruilian New Materials.
Besides established manufacturers like Tokuyama, Idemitsu Kosan, and LG, Chinese manufacturers are also beginning to enter into the market to supply functional layers, such as Laite’s Red Prime. Samsung and UDC are planning to commercialize blue phosphorescent materials in 2024 in order to address the lifetime issues of blue OLEDs. Many new technologies, such as South Korean materials manufacturer, Lordin’s, patented Zero Radius Intra-Molecular Energy Transfer (ZRIET) rely on the efficiency of energy transfer between the main host and dopant, which is highly dependent on the distance between them. When that distance approaches zero, the quantum efficiencies of the molecules will not be affected at all. Therefore, efficiency can be improved by controlling the speed of energy transfer between the internal molecules of the material. Lordin has synthesized a material that maintains the respective characteristics of the main and dopant materials as well as a high energy transfer rate, which is expected to produce OLEDs that will be four times more efficient.
TrendForce believes the next stage of mobile terminal products will shift from folding smartphones to smart wearables, IT, and automotive applications, which will place more stringent demand on OLED components. The layout of panel manufacturers is becoming clearer thanks to brand endorsements. LG, Samsung, and BOE are all aggressively competing for priority for the Tokki G8.7 evaporation machine to gain an advantage in expanding application. The accelerated commercialization of blue phosphorescent materials and more innovative technologies, such as Samsung’s vertical evaporation developed with ULVAC, eLeap lithography, and printing processes to improve the aperture ratio will help push the expansion of OLEDs in the display industry. Meanwhile, costs will become more competitive as more Chinese manufacturers enter the market.
TrendForce’s research shows that material shortages, logistical delays, and relief subsidies for the American people not only supported global TV panel shipments in 1H21, but also drove an extended rise in quotations. However, as end product inventory climbed, stocking momentum fell rapidly in 2H21, not only inducing a sluggish peak season, but also bringing about a 1H22:2H22 shipment ratio that deviated from historical precedent. Shipment volume was not the only performance statistic to fluctuate in 2021. Originally planned factory closures were also delayed due to market demand, again transforming the entire industry landscape.
Looking forward to 2022, the global display production capacity of large generational fabs in 2022 will continue to grow through OLED production capacity generated by Korean panel manufacturers, the extension of LCD production, and continuing injection of maximum production capacity into the market from certain LCD production lines originating from panel manufacturers in other regions. Thus, overall TV panel supply is expected to spike dramatically. Although demand in emerging markets has recovered, TV panel quotations are also more prone to manipulation by branded panel companies than in 2021. A certain amount of momentum is expected in the end market for the stocking of TV panels. However, considering continually rising shipping and logistics costs, the unresolved global inflation issue, and life gradually returning to normal will inhibit the shipment performance of TV sets, demand for panels will also see an impact.
Therefore, after considering a number of factors, TrendForce expects global TV panel shipments to reach 281 million units in 2022, with an annual growth rate of 4.3%. As panel makers continue to implement a strategy of increasing panel size and overall shipments increase, positive growth is expected in size of shipped area.
The current global Gen5 and above large generational fab LCD panel supply and demand model shows that the growth rate of demand area cannot keep up with the growth rate of supply area and the shortfall between supply and demand in 2022 will be larger than that in 2021, which also suggests that panel manufacturers will meet tougher challenges in 2022. It is worth mentioning that there are still several key factors to be observed in 2022. For example, the closing schedule of LCD production lines at Korean panel factories, the adjustment of TV and IT panel capacity allocation, and the impact of the pandemic and war on whole device demand and component supply will all be key indicators of display industry trends leading into 2022.
（Image credit: Samsung）
Despite their similar physical dimensions, notebook panels and tablet panels entail drastically different market conditions. Being two of the strongest performers in the relatively oligopolistic tablet market, Apple and Samsung collectively possess a nearly 60% market share, thereby forcing other brands to adopt a relatively passive strategy that prioritizes conserving market share over adopting emerging technologies. In contrast, the notebook computer market has remained competitive throughout the years, with market leaders HP, Lenovo, and Dell holding the absolute advantage in the commercial notebook segment. Even so, Acer and Asus still enjoy some degree of dominance in the consumer segment, not to mention the fact that Apple has carved a niche market of its own thanks to the absolute differentiation of MacBooks from the rest of the field.
With greater diversity of brands comes greater competition in the market. As such, companies must now continue to refresh their product specs and product ranges in order to stay competitive. In this regard, Mini LED products would appear to be likelier to see adoption in the notebook computer market than in the tablet market. It should be pointed out that SDC (Samsung Display Co.) holds the sole patent for OLED tablet panels – the main competitor of display solutions featuring Mini LED backlights and LCD panels. Although SDC is still figuring out its medium- and long-term strategies in the tablet market, it has been relatively aggressive in capturing share in the notebook market. For instance, SDC’s OLED notebook panels have been gradually cannibalizing market shares from LCD notebook panels since 2021. To date, more than four million notebook computers featuring Samsung’s OLED panels have been shipped, accounting for a nearly 2% market share. In addition, almost all mainstream notebook brands have started carrying their respective lineup of OLED notebooks.
The meteoric rise of OLED models in the notebook market this year can primarily be attributed to SDC, which is the sole supplier of OLED notebook panels. Whereas SDC previously allocated most of its production capacity for OLED (Rigid OLED) panels to smartphone displays, the successive ramp-up of Gen 6 production lines for OLED (Flexible OLED) panels in China has resulted in a hypercompetitive market with plummeting quotes that both placed significant downward pressure on the existing price band of rigid OLED panels and negatively affected demand for rigid OLED panels. Given that the aforementioned factors are unlikely to reverse course, SDC has therefore decided to reallocate their production capacity for rigid OLED panels from smartphone displays to notebook displays instead, since the former has continued to decline as an added value while the latter appears to have much more potential for growth.
Incidentally, SDC has spent considerable time cultivating its presence in the notebook computer market. The company formerly positioned its OLED solutions exclusively in the flagship market segment, with UHD/4K being the only resolution available on its OLED notebook panels. The adoption of these products was lukewarm at best due to OLED panels’ prohibitive prices and the very limited target audience for UHD models. Moving to 2020, however, SDC adopted a more ambitious approach to the notebook market and subsequently released a host of OLED panels featuring Full HD resolution in accordance with the mainstream market’s demands. By doing so, SDC was able to not only substantially lower its OLED notebook panel quotes, but also align its products with the enormous total addressable market of mainstream notebook consumers, in turn skyrocketing notebook brands’ willingness to adopt OLED panels.
Not only have OLED displays enjoyed a longstanding presence in the high-end smartphone and TV segments, but most consumers also generally understand that OLED panels are superior to traditional LCD panels with respect to such specifications as color saturation, contrast levels, and even physical thickness. For notebook computer brands, adopting OLED panels in their displays allows said brands to cut down on costs that would otherwise have to be spent on either educating the average consumer on popular science topics related to display technology or marketing the brands’ display solutions, as OLED displays’ superior specs are already widely known. That is why almost all mainstream brands, ranging from Asus to HP and Dell, have released OLED-equipped notebook computers, some of which even boast consumer-oriented product positions and consumer-friendly retail prices.
On the other hand, although the integration of Mini LED backlights significantly bolsters LCD panels’ traditionally weak contrast levels, significant marketing costs are required to ensure consumers understand the benefits of this new backlighting technology. While OLED solutions are already widely recognized in the market, Mini LED products’ vast marketing costs represent a significant competitive weakness against OLED products. Furthermore, manufacturing costs of display solutions that feature Mini LED backlights and LCD panel modules are about 30-50% higher than those of equivalent solutions featuring OLED panel modules due to the former’s complex design, high number of components, and limited economy of scale. Hence, high manufacturing costs are yet another obstacle preventing brands from investing in Mini LED development.
（Image credit: PikiWizard）
As Samsung Display (SDC) decided to extend the manufacturing operations of its Korea-based Gen 8.5 LCD fab, and tier-two panel suppliers are still slow to reassign their production capacities from TV panels to IT panels, TrendForce expects total TV panel shipment for 2021 to reach 269 million units, which is relatively unchanged compared to 2020 levels. Panel suppliers will continue to focus on large-sized TV panels this year in response to several industry-wide developments, including M&A, reduced production capacities, improved manufacturing technologies, and increased panel demand. Furthermore, as the persistent price hike of TV panels continues to reduce the profit margins of TV sets, TV brands have started to gravitate towards larger, more profitable TV sizes. TrendForce therefore expects the average TV panel size this year to increase by 1.6 inches and move towards 50 inches.
TrendForce analyst Jeanette Chan indicates that the shift towards large-sized panels is an effective means of expending the production capacity of panel suppliers. Case in point, due to the limited production capacity for TV panels in 1H21, not only are TV panels currently in short supply, but TV panel prices are also on the rise. On the other hand, the demand for TV panels in 2H21 will depend on several key factors: first, whether the increased retail price of TV sets will hamper consumer demand; second, whether the pandemic will be effectively brought under control as more countries begin vaccinations; third, whether the impending global economic recovery will be a significant one. And finally, whether a market bubble will appear as a result of TV manufacturers’ overbooking panel orders in anticipation of potential hindrances including the price hike of materials in the upstream supply chain, the shortage of glass substrates due to such accidents as facility fires, the shortage of IC supply, and the extended shipping times.
Thanks to their persistently rising production capacity and successful acquisitions, China-based BOE and CSOT, the two largest panel suppliers in the world, are expected to collectively account for about 40% of total TV panel shipment this year. At the same time, BOE and CSOT are actively improving their technologies and making a push for high-end products, such as 8K, ZBD, and AM Mini LED. By leveraging their improved technologies and available funds, the two companies are likely to extend their operations upstream by systematically undertaking vertical integrations.
On the other hand, HKC, which is currently raising its production capacity, has garnered much attention in the market amidst the current shortage situation of TV panels. Along with its Changsha-based H5 fab, which is set to kick off mass production shortly, HKC possesses four Gen 8.6 fabs in total. By raising its production capacity and engaging in additional strategic partnerships with tier-one TV brands, HKC is expected to enter the top three ranking of panel suppliers by TV panel shipment for the first time ever, with a shipment of about 41.91 million units this year, a 33.7% increase YoY.
Taiwan-based AUO and Innolux are expected to experience YoY decreases in their shipments this year as their production capacities are relatively limited, although both companies’ efforts to optimize their products and engage in cross-industry partnerships have brought them certain competitive advantages. In particular, AUO is leading the panel industry in developing not only ultra-high-end products, such as 8K+ZBD, but also Micro LED displays, whereas Innolux holds competitive advantages in product diversity and in-house ODM services. It should be pointed out that these two Taiwanese companies are able to deal with the current IC shortage situation better than their competitors because their parent companies have longstanding business relationships with IC design companies.
With regards to Korean suppliers, although LGD and SDC have both prolonged their LCD manufacturing operations in Korea in order to satisfy the current bullish market demand, the two companies are primarily focusing on transitioning their offerings to new products. LGD will expand the OLED production capacity of its Guangzhou fab in 2Q21 as part of its effort to dominate the OLED market. As for SDC, the company has dropped out of the top six ranking this year as a result of its lowered production capacity. However, new TV sets featuring SDC’s QD-OLED panels are expected to officially hit the market in 4Q21, in turn driving SDC’s yearly TV panel shipment to 2 million units in 2022.
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Owing to demand generated by the persistent stay-at-home economy last year and from the emerging markets in certain developing countries, global TV shipment for 2021 is expected to reach 223 million units, a 3.1% growth YoY, according to TrendForce’s latest investigations. The delay of UEFA Euro 2020 and the Tokyo Olympics until this summer will likely also play a role in driving up TV demand, regardless of whether live attendance will be allowed at the events. However, prices have increased repeatedly and considerably for not only IC components (used in TV set assembly), which are in shortage due to tight foundry capacities, but also TV panels. The price hike of TV panels has persisted since last June, with 32-inch panels, which are indicative of the rest of the TV panel market, reaching a massive 134% price hike for the period.
TrendForce’s investigations also show that the increase in panel prices has made it difficult for white-label manufacturers and tier 2/3 brands, which have traditionally relied on aggressive pricing to achieve their sales performances, to procure sufficient panels. Case in point, TV shipment from these companies has been gradually declining since last year. Conversely, suppliers have been giving major TV brands top priority ahead of the aforementioned companies to procure both panels and components because major TV brands generally place orders regularly and in large quantities. For the first time ever, the combined market shares of the top five brands, which are Samsung, LG, TCL, Hisense, and Xiaomi, surpassed 60% last year. This figure is expected to further increase to 62% in 2021, representing the fact that the TV market is progressively becoming an oligopoly.
As brands begin to favor large-sized products, 60-inch and larger TVs are expected to account for 17.7% of total TV shipment for the first time ever
With regards to various TV sizes, 32-inch panels have more than doubled in price since the start of the upturn last June. In response, TV brands have been transitioning their product lines to TVs that are at least 55 inches in size. More specifically, 55-inch TVs and ultra-large-sized TVs (60-inch and above) will account for 20% and 17.7% of the total TV shipment this year, respectively. Whereas the 20% shipment share of 55-inch TVs remained the same as last year, the 17.7% shipment share of ultra-large-sized TVs is 3.3% higher than last year’s figure. With regards to the annual shipment of ultra-large-sized TVs, 2021 marks a year of considerable growth compared to previous years, which generally saw YoY increases of 1-2%. This growth reflects the necessity for TV manufacturers to quickly leverage the consumer demand for large-sized TVs in order to maintain a stable growth in the industry, given the substantial price hike of TV panels.
As the difference between OLED and LCD panel prices narrows, TV brands are compelled to accelerate their OLED TV strategies
In response to the massive price hike of LCD panels, TV brands have begun to slightly raise the retail prices of TVs across various segments in order to keep up their bottom lines. However, if brands were to at once completely offload the increase in panel prices to the retail end, consumer demand would plummet as a result. A slow and gradual price hike is therefore expected to take place instead. Incidentally, it should be pointed out that the price hike of TV panels would be unlikely to stop in the short run even if the current panel shortage were alleviated in the future. As such, TV brands are expected to have limited room for profit growth in 2Q21.
The OLED panel market, on the other hand, has taken an opposite turn compared to the LCD market. For instance, prices of 55-inch UHD OLED panels were four times the prices of equivalent LCD offerings at the start of 2020, 2.9 times at the end of 2020, and 2.2 times in 1Q21, while prices of LCD panels underwent monthly increases. In addition to the narrowing gap between OLED and LCD panel prices, the panel industry’s production capacity for OLED panels saw a major boost thanks to the capacity expansion of LGD’s Gen 8.5 fab in Guangzhou. TrendForce expects OLED TV shipment for 2021 to reach 6.76 million units, a staggering 72% increase YoY, as OLED offerings become the top strategic priorities of TV brands in the high-end TV market this year.
For more information on reports and market data from TrendForce’s Department of Display Research, please click here, or email Ms. Vivie Liu from the Sales Department at firstname.lastname@example.org