​According to the Global Mobile Suppliers Association a total of 50 operators have launched one or more 3GPP-compliant 5G services in 27 countries, with 39 of those offering mobile services (3 limited availability) and 29 offering Fixed wireless access or home broadband services (10 have limited availability).  We list those countries that qualify and the carriers involved, the size of the country (m2) and the size relative to Monaco, the smallest country in the list, which has an area of .78m2, under the idea that the larger the country, the more difficult and costly for 5G to cover the entire available area.

​A few days ago Tianma (000050.CH) signed for a syndicated loan of 6b yuan (~$856m US) to finance the second phase of its Gen 6 Rigid/Flex fab in Wuhan.  The first phase began construction in 2015 ($12b yuan or $1.7b US) and was completed almost two years ago, with the 1st product shipped in June of last year, around when the 2nd phase began its build out.  Phase one of the project has a maximum raw capacity of 15,000 sheets/month while phase two, which is expected to be completed at the end of 1Q next year, will have a capacity of 22,500 sheets/month.  Tianma also operates a Gen 4.5 pilot line and a Gen 5.5 OLED fab in Shanghai, and is planning on building another Gen 6 fab in Xiamen that is projected to begin operation in late 2022.
Currently we believe Tianma has a 2% share of the overall OLED market and a ~16.6% share of the Chinese OLED panel market, which will decrease as other panel producers in the region add additional capacity.  The Xiamen fab will be an important project if Tianma wants to maintain a significant share of the Chinese and world OLED markets.  Once the 2nd phase is operational, the fab will have a capacity (raw and unyielded) of ~31m 6” smartphone OLED display units/quarter.

LG Display (LPL) and parent LG Electronics (066570.KS) have been the dominant force in the OLED TV market, with capacity, production expertise, and a rather broad product line for what is still a niche product.  They sell large OLED panels to other OLED TV producers and obviously have a well-known OLED TV line under the LG brand, and face very little competition, particularly from Samsung Display (pvt) and Samsung Electronics (005930.KS), who years ago were developing a large panel OLED TV that competed directly with LGE.
There was significant difference between the two rivals at that early stage, with Samsung Display using an RGB process while LG Display used a white OLED with a color filter.  Samsung eventually decided that developing an OLED TV using RGB was not a viable process for large panel TVs and abandon the project but continued to develop, quite successfully, the RGB process for small panel displays (smartphones, tablets, laptops).  LG Display continued to develop the WOLED process, which is a simpler manufacturing process that does not pattern the OLED material like an RGB based display but uses a color filter to create individual colored pixels and sub-pixels.
In reality, the Samsung RGB large panel process had a significant limitation, the metal mask that was used to pattern the OLED RGB material was limited in size due to physical characteristics that limited panel production to Gen 6 substrates, while the LG process did not have that limitation, but the color filter used by LGD reduced the light output of the display and was an additional cost.  Both companies have perfected their respective technologies, with the small panel OLED market a highly competitive one, while the large panel OLED market essentially owned by LG, until now.
Sharp (6753.JP) has developed a 30” rollable 4K OLED panel using the same RGB method that Samsung uses for small panel OLED displays, which we assume will eventually compete with LG’s methodology.  The Sharp OLED panel therefore has no color filter and should be brighter (no color filter to reduce overall output) and less expensive (eventually) to produce.  That said, there is still the limitations of FMM (Fine Metal Mask) which include mask deformation, mask alignment, and dimensional accuracy, with such limitations increasing as the mask size increases, which has typically limited RGB OLED displays to a maximum size of ~24” (Sony (SNE) produces such a display).  Sharp seems to have found a way to increase the size of the mask without issues, especially when producing such a display on a flexible substrate.
The questions that such an announcement incurs are whether Sharp has developed a process that allows for larger RGB OLED displays or whether this is just a minor extension of existing FMM RGB OLED displays, and whether Sharp intends to develop an OLED product line of flexible OLED displays in a smaller size than is currently available.  Given Sharp’s well telegraphed plans to expand its TV brand, we have to assume the latter, but producing such displays cost-effectively and at a price point that is attractive to consumers remains an open question.  Panel sizes in the 30” range would tend to be more oriented toward monitors, so the market for a rollable 30” OLED TV is an unknown, but again, if Sharp can produce such a device at a reasonable price point, perhaps they can open the OLED market to a wider swath of consumers who don’t desire a huge TV.  For reference an open cell (bare panel without frame or electronics) sells for ~$31 in quantity, and while the cost of an automatic rollable system would add significant cost to such a device, that would be a very hard price to compete against.
Sharp’s  promo video: https://youtu.be/Jzr7208A-os
​

OLED displays are praised for their contrast and color, especially in small panel devices where they are the choice for high-end smartphones and have been moving down the price curve to mid-priced devices.  OLED displays are also well-known for their capabilities for TV displays, and as a self-emitting display, are considered the highest performing display in many categories.  That said, what other uses have there been for OLED displays in the consumer electronics world?  There are OLED tablets, although since 2016 only Samsung Electronics (005930.KS) and the parent of OLED display producer Samsung Display (pvt) has released OLED based tablets.  There are a number of OLED panel producers developing OLED automotive displays, but few high-volume CE products have favored OLED displays other than a number of high-end reference and gaming monitors and laptops.
Samsung Display wants that to change, and will be expanding its offerings for OLED laptop displays, but not toward the high-end.  Samsung is heading toward a 13.3” FHD model (1920 x 1080) that will be lower in price than the typical 4K (3840 x 2160) OLED display used in premium laptops.  Samsung is working toward bringing OLED displays to a broader swath of mobile devices by moving OLED displays to lower resolutions, which will widen its potential customer base.  Other considerations aside, the FMM (masks) used for lower resolution OLED displays should cost less which should lead to a lower cost, but more importantly, it will help to fill excess OLED capacity that Samsung Display might have, once they establish a steady customer base.
There are a number of OLED laptops available today, from a variety of brands, although Samsung itself only uses the technology for its tablets and has no OLED laptop offerings.  We believe this is a marketing issue, as Samsung has been a proponent of quantum dots for large panel products and uses OLED only in its smartphones and tablets.  In fact Samsung is expected to offer a quantum dot laptop in 2020, despite Samsung Display’s development efforts for OLED laptop displays.  Samsung Display does sell OLED laptop displays to a number of customers (see Table 1) as noted below and with the introduction of a lower resolution OLED display that is priced below more typical 4K (3840 x 2160) offerings, they should be able to attract new laptop customers who operate at a lower price tier.

​As we noted, Samsung Display is always interested in filling idle OLED capacity, and raising the company’s overall OLED utilization level is the key to maintaining and increasing OLED display profitability.  Obviously the smartphone market will generate very high unit volumes, but as larger devices, laptops, even with much lower volumes (see Table 2), use a significant amount of display capacity.

​All in, if Samsung Display is able to price its lower resolution OLED displays at a level that can reasonably compare with LCD laptop displays, they will be able to capture a more significant portion of the laptop display market and generate higher sales and utilization for its OLED plant.  This will not be an easy task given the weak LCD display pricing seen over the last few quarters, but laptop designers and marketers would jump at the chance to have another differentiating factor to use in a crowded laptop market.  Rather than offer OLED based laptops only to gamers and videographers, such displays could bring OLED laptops down to rank and file laptop consumers and expand the range of OLED displays to more than just a handful of high-end laptops.

​While totals are just being calculated Alibaba (BABA) noted that by 6PM the sales numbers for merchants on their site had surpassed last year’s total of $30.8b US, indicating that Chinese buyers were taking advantage of sales for this, the biggest shopping day worldwide.  For reference, the 11/11 holiday, also known as ‘Single’s Day’ generated 13 times the daily sales average last year for a total of $30.8b while this year $36b was hit almost half way through the 24 hour period, with $1b being sold in the first 1m and 8 sec.  The US holiday Black Friday is expected to generate ~$29b.  The shopping holiday, which was created as a celebration for single college students in 1993 and then adopted by Alibaba, started off with a concert (The “Countdown Gala”) in Shanghai by Taylor Swift, sponsored by Alibaba, of course.
Chinese smartphone brands all reported spectacular sales numbers during the holiday and while final numbers are not in or verified, here’s what they have said so far:

• Huawei (pvt) – Said sales on its own self-run on-line mall exceeded last year’s total holiday sales in 1 minute
• Huawei’s Honor brand (budget) was the number one seller on all three major e-commerce platforms in the first two hours
• Vivo (pvt) said sales on its e-commerce platform were 3.75 times more than last year in the first two hours
• Oppo (pvt) said sales in the first minute on its website exceeded last year’s entire 11/11 day sales.
• Xiaomi (1810.HK) said sales broke the 1b yuan mark ($143m US) after one hour and were up 22% over the same period last year.

• Sales of Apple (AAPL) products (iPhone 11 included) on Tmall saw the first ten minutes of sales equal to 7 times the whole day sales last year.

Logistics will be the issue now that the 11/11 holiday is over and Alibaba estimates that there will be ~5,000 km of automated shipping lines to manage what is expected to be a 75% increase in orders over last year, with large shipping firms adding significant automated capacity since last year.  These additions are expected to reduce the time to ship by five hours over last year, with new lines able to scan over 1,800 waybills per hour.  While we note that all 11/11 numbers have yet to be verified, it would seem that the 2019 11/11 holiday has been a success and while specific product categories have yet to be deciphered, could go toward reducing bloated CE inventory levels.

While Hisense (009921.CH) is a relatively new TV brand in the US, it is the 4th largest TV manufacturer worldwide, and grew TV sales in the North American market by 34.3% and in the US by 65.1% at the mid-point of this year.  LG Electronics (066570.KS) is the 2nd largest TV brand in the US, and while not growing as fast as Hisense, has an almost 18% share of the North American market.  LG also owns a number of patents involving LED backlighting and networking that have been used by Hisense in a variety of TV products assembled in Mexico and then sold in the US.  In particular, when a TV is used as a ‘smart’ device, meaning it is connected to the internet directly, it can use protocols that are covered by a number of LG’s patents, as do a number of the Hisense TV sets sold here.
LG notified Hisense of potential patent violations at the end of January and widened that notification in June, entering into a back and forth letter exchange between the two companies that continued until they met in China last July.  Again, letters passed back and forth, with LG entertaining the idea of license negotiations, but Hisense continually asked for additional information while maintaining sales of the affected products in the US.  Yesterday LG filed a complaint against Hisense for the unlicensed use of their backlighting, WLAN technology, and two additional patents.  LG is asking for an end to the infringement, adequate compensation, and court costs, which will likely translate into a final license fee that gets negotiated right before the trial begins.

​Whether we want it or not, 8K is here.  Panel producers and TV brands will be jumping at the opportunity to squeeze premium out of the TV market for the holidays and the next few years with the promotion of 8K TVs, especially as we approach the 2020 Olympics in Japan (July 24, 2020), where portions of the programs will be broadcast in 8K over the Japanese NHK network.  That said, why would you want to buy an 8K TV?  Are they so much better than 4K and HD TVs that they are worth the astronomical premiums that are (and will be) charged for 8K in the near-term.

​There is almost no native 8K content available other than a few YouTube, NASA, and travel shorts.  As we have noted, there will be some 8K content available  during the 2020 Olympics in Tokyo, but the content space, especially broadcast content is still gearing up for native 4K content.  So other than the story that you are buying a TV that will be around for many years, what might be suggested by retailers and brands as a reason for buying an 8K TV?  Simply put, “upscaling”
Upscaling is the process for taking lower resolution video content and ‘expanding’ it to fill higher resolution displays and 8K TVs put that process to the test more than any so far.  To understand what is actually happening, we offer this table of resolutions:

​Each of these calculations is based on a 75” TV screen, which means if content is developed in HD and shown on an HD screen, the actual image will fill each pixel.  If it is shown on an FHD screen, there will be no information ~10 pixel in each inch, and if it is shown on an 8K TV, there will be no information for ~83% of the pixels/inch.  Does this mean that you see lots of blank spots when HD content is played on larger resolution screens?  No, because TV engineers have created upscaling engines that fill in those blanks and give you a full picture.  There is a hitch however, and that is the law that says you cannot ‘create’ image data if it was not there in the first place, so display engineers came up with some solutions that sort of ‘fill in the blanks’.
In the most simplistic forms, simple upscalers take the video information from a single HD pixel and create duplicate pixels (with the identical information).  Upscaling from HD to UHD requires each HD pixel to be duplicated eight time, creating a 9 pixel block from just one.  It’s a great idea, but results in lots of duplicate information that creates jagged lines and some messy looking images.  Who looks at HD content these days anyway?  You do, as much news content is HD based, but using that methodology when you need to fill 8K resolution screens would be (and is) almost impossible to view.  Other methods for creating those missing pixels get more complex, some taking information from a number of pixels around the subject pixel, while some check for ‘noise’ or individual pixel data that might be distorted to avoid duplicating the inaccurate information.  With the advent of faster processors, upscaling techniques have become more sophisticated with many brands designing their own scalers as a selling point.
Current upscalers combine adjacent data with information from the same pixel location in both previous and forward frames to get a better understanding of what is actually happening to the image on an other than single moment in time, and of course, artificial intelligence and machine learning have nw become the mantra for upscaling algorithms and hardware.  That said, there is only so much even the best upscaler can do, as the information it has available is limited to the contents original format, so the ‘magic’ that TV brands extol in 8K sets, that are said to make content look better than the original is quite iffy. 
There are certainly more pixels/in. in an equivalent 8K TV, and native 8K content will look spectacular on an 8K set, but the difference between what 4K content would look like on a 4K set and what it would look like on an 8K set is so minimal that many hardware reviewers find it difficult to see the difference.  When you bring that down to the average consumer, it would be hard to convince a buyer that he or she is going to see an immediate improvement in day-to-day video content.  All in it means that consumers have years before they have a reason to buy an 8K TV  and by then we suspect there will be little premium to pay.

​As we get closer to the holidays consumer electronics companies step up advertising and promotional activity until consumers become inundated with buzzwords and jargon that extols the virtues of each and every electronic device that is about to hit store shelves.  If, by the end of the year you haven’t heard about a CE product or new device, by the time the Consumer Electronics Show (January 7, 2020) rolls around, you will.  We don’t fault CE companies for trying to sell their products, as they have to do so to stay in business, but the reasoning behind some of those products can sometimes be despoiled by ‘over-enthusiastic’ marketing.  We come from a lifelong background that has been deeply entrenched in the CE business, so it is relatively easy for us to see how easily things can go off the rails and how, just by repeating it enough times, companies can convince themselves that consumers must have whatever it is they have developed, regardless of whether it is a good fit or benefits the consumer.
Our case in point is 8K TV.  It sounds good to consumers as usually eight of whatever is better than four of whatever, but we see it a bit differently and believe that pushing new technology too quickly, despite the knowhow to do so, can be detrimental to sales.  This is easy to see when you go into a CE store and watch a consumer approach the myriad of TV sets available in those settings.  Typically they wander a bit, and if asked if they need help, they ask for a bit of time to peruse.   Salespersons will then move to their computer, tablet, or smartphone to check commissions on a variety of sets in anticipation of a potential sale.  The customer wanders for a few more minutes, becoming progressively more overwhelmed by multiple brands, multiple technologies, and the realization that they really don’t know that much about what they are about to buy.  At this point they search for a salesperson and the dance begins.
A good salesperson will ask at least a few questions before diving in to the nuances between brands, technologies, screen size, and lastly price, and this is when buzzwords start flying.  4K, HDR, UHD, Dolby (DLB) Atmos, OLED, quantum dots, and maybe even ‘AI’ float quickly through the air as the salesperson walks the customer past one set after another, and the customer’s now overloaded brain slowly shuts down.  There are a number of cards that the salesperson can play at this point, but unlike the old days of CRTs, when you kept a TV for ten years and replaced it with another similar CRT, TV technology moves infinitely faster and ‘fear of obsolescence’ is the easy way for a salesperson to upsell a generic customer.  “You are right, things are moving fast in the TV space, so I recommend that you keep one step ahead of the game and buy this 8K TV.  Yes it’s more expensive, but you won’t have to replace it for many years, while those buying a 4K TV will see it outmoded in a short time”.
Perhaps we have oversimplified things a bit (not really), but as we watch these scenarios play out in Best Buys (BBY), Wal-Marts (WMT), and other CE retailers, we see consumers walk away from purchases far more often than expected, more often because they are intimidated or overwhelmed by potential offerings than due to pricing.  Few TV set buyers want to feel that they have just made a substantial cash purchase that will be superseded by new technology in less than six months, with some still hiding an old plasma or 75 lb. 26” CRT TV in their attic or garage.
There is certainly a case to be made for what amounts to ‘technology stability’ in the TV business, although few on the product side will agree and the temptation to push ‘our’ new technology to stimulate sales in mature markets allows marketing folks the ability to produce PowerPoint presentations with charts with steep up and to the right curves, rather than those with mundane but more predictable growth.  We understand that business is business and rapid growth generates bonuses, but if new technology is pushed out too fast for the average consumer, the reaction is to hesitate, and given that many CE purchases are quasi-impulse purchases (“I want to buy a TV but I don’t know which one…”) hesitation means a lost sale. 
With slowing TV sales affecting even the fastest growing CE markets, perhaps a rethink might be worthwhile, and while a balance between technology advances and market stability is certainly a difficult one to find, foisting new technology on consumers way before it is necessary or even viable can have the effect of slowing the pace of sales by those in the middle of the sales pyramid, who keep the lights on at most CE companies.  We pick on 8K as it has all the earmarks of a TV technology that was not developed because of consumer demand, but as a way to generate premiums in a market where consumers expect almost every new feature to be ‘free’ and very few consumers can discern the differences in TV set quality without having been told what to look for first.  We certainly hope that CE technology continues to improve, but if you have to be told that something is actually better than what it seems to be, it’s probably snake oil.