According to the Korean press, Samsung Display (pvt) has selected the suppliers for its Galaxy S8 smartphone that will use a new stack of OLED materials[i], and while the company indicated that “matters relating to the new products cannot give (sic) out”, the replacement of a new OLED stack has produced efficacy improvements of between 15% and 30%.  Samsung had decided not to implement the stack and material changes for the S7 as it had ample supply of those materials, which had been reduced to their lowest cost through cumulative volume discounts.  New materials reset the volume discounts as indicated by Universal Display (OLED) the supplier of Samsung’s phosphorescent emitter materials, who lowered their guidance on the postponement of Samsung’s conversion from the old materials to new ones for the S7, which they had expected this year.

We note that under the current contract with Samsung, Universal Display is the exclusive supplier of phosphorescent OLED emitter materials to Samsung, which are indicated below under both ‘red’ and ‘green’.  As a blue phosphorescent material is not available, Samsung Display and others use a blue phosphorescent emitter material, which is outside of the UDC contract and is supplied by Idemitsu Kosan (5019.JP).  Interestingly, the green host material for the S7 was supplied by Samsung subsidiary Samsung SDI (006400.KS) who beat out the combined UDC and NSSMC (5401.JP)[ii] green host material that was being used in the S5/S6, but now seems to have lost to Japan’s NSSMC, although not in combination with Universal Display, who has seen their green host material business drop from a peak of $13.2m in 2Q 2014 to negligible amounts this year.  The host business is highly competitive and has little of the IP protection seen in the emitter material business, and as such is subject to rigorous price/performance measures by Samsung Display.

While little change was expected for red and green emitter supplier Universal Display, as noted above, the new materials they will provide to Samsung starting early next year (our assumption) will boost material ASP’s as cumulative volume discounts reset to full price.  As Samsung Display will be building more devices in 2018, we expect those discounts will triggered relatively quickly, especially for green emitter as it is used in greater quantities than red emitter.  While it is hard to pinpoint such discounts, we would expect to see the first set of trigger points for red reached in late 3Q or early 4Q of 2017, and earlier for green should Samsung adopt the new OLED stack structure across much of its manufacturing line.  The offset here is the potentially better material efficiency of the new stack, which could lead to lower material usage on a per device basis.  All in, UDC should see a boost to material ASPs but will likely get less of an overall benefit from the increasing capacity and device volumes as Samsung Display’s material efficiency increases.


Source: etnews.com

 

 



[i] Current stack is called M7 – New stack will be M8


[ii] Nippon Steel & Sumitomo Metal Corp

Philips (PHG) issued a statement clarifying that it had already made a patch to protect its HUE Smart LED bulb system from hacker attacks.  The statement was in response to a paper written by two students and a professor at Weizmann Institute in Israel, explaining how the students were able to compromise the HUE system through a bug in the ZigBee protocols that the system uses to verify local security and were able to remove the bulbs from the Philips system and extract the encryption key that Philips uses to authenticate new firmware updates.

The paper goes on to speculate that by capturing only one bulb in the system, hackers could use the ZigBee connections to spread a virus across the system in minutes, and using Paris as an example, the believe that it would take 15,000 bulbs to cause a chain reaction across the city and control or block the lights, which would also allow them to stop further firmware updates, giving the hackers permanent control.

According to Philips, the research team informed the company of their findings and Philips patched the system before the report was published, stating “At no time was a virus created or used to infect any Philips Hue products”, but the company also urged consumers that had already purchased the bulbs to update their software, “even though the assessed risk was low.”  Other sites however, have stated that malicious updates could still be used to infect one smart bulb that is in close proximity to others, and spread the code quickly.

While the benefits of IoT are significant, particularly in the manufacturing space, the devices, the data streams, and the overall systems tend to be relatively vulnerable to worms and other forms of malicious behavior.  Regardless of the purpose of the IoT devices, the implementation of chip level security to protect the devices and data is absolutely essential if such networks are going to be put in place.  The Stuxnet worm, allegedly developed by a US and Israeli team around 2010, was used to sabotage Iran’s nuclear program by compromising the capacity of the program’s centrifuges by speeding up the rotation speed enough to ‘vibrate’ the device until it no longer worked.  This was in the ‘old days’ before the implementation of IoT, and shows how such vulnerabilities can be used to influence a rival or steal data.  Most people will not worry too much about whether their LED light bulbs can be hacked, but IoT for the manufacturing sector is far more sensitive to such breeches.  More devices means more risk, and those assessments are much lower on the IoT totem pole than the benefits championed by suppliers. 

We have repeatedly mentioned the fact that Chinese display producers are in an advantageous position in regard to capital spending, as the Chinese government, at a number of levels, subsidizes the industry.  BOE (200725.CH), the largest of the Chinese display producers is the recipient of a substantial number of these subsidies, and while we note the dollar value, the subsidies are also reflected in commitments by provincial and local governments to provide the infrastructure necessary to build such large fabs.  This usually includes bringing power to a particular location, sometimes in regions where it must be drawn from grids considerable distances from the site, providing water, which can be even more problematic, and even logistical subsidies, like the building of roads and rail lines to connect the fab to main transportation routes, all of which significant costs to non-Chinese producers.

All of that said, between 2011 and 2015, BOE received 17.769b yuan, or $2.63b US, and while much of this is considered ‘research grants’ for R&D purposes, it goes a long way toward reducing the long-term cost of display development in China, whose long-term plan of eventually becoming self-sufficient in the display space has some overtones of market domination.  It would be ridiculous to assume that Chinese panel producers will focus entirely on in-country production, as they are already selling outside of the mainland, so the Central government’s argument that these subsidies are for the development of local manufacturing is moot, but not surprising.  Few companies would refuse such ‘gifts’ regardless of their nationality, so we can’t fault BOE for taking them, although the Chinese government might acknowledge that they do not make these subsidies purely for locally altruistic purposes (and we also know that will never happen!).

While one of the more poorly kept Apple (AAPL) secrets, the ‘Magic toolbar’, as it was called until Apple marketing realized how weird the word ‘magic’ is when describing a mobile device, is a ‘small step for Apple-kind’ toward the potential adoption of OLED in a more general way.  The strip is thinner than any LCD strip would be, given the lack of a backlight, and represents a second test of OLED technology for Apple, after the Apple Watch.

We believe the strip is produced by Samsung Display (pvt) on its A2 OLED lines, running, in this case, on a rigid substrate, but given its relatively small surface area, will make little difference to overall demand at Samsung Display.  Apple is taking small, baby steps toward shifting its display technology, likely after making a bit of a misstep when funding a project to create sapphire covers for the iPhone, but the CE industry, particularly the mobile segment, is no longer one where brands can take their time with new technologies or designs, as competition from aggressive Chinese brands pushes designers toward a more proactive feature development cycle.  This pressure will have consequences, such as the Note 7 battery issue, but that is the nature of the beast, and while such small steps, like the MacBook Pro touch strip, are nice to see, the question remains as to why no touch on the MacBook Pro screen instead?  It is not like touch is a new technology, and Apple should have little trouble convincing consumers to pay up for a higher-than-average touch system that does not degrade the display, so while we are happy to see Apple moving in the right direction, and understand their caution, especially after the Note 7 debacle, will consumers allow them the luxury of time, when others are moving at a more rapid pace?  The MacBook Pro will be a good test of the durability of Apple’s loyal customer base.