BOE to Begin Production at New OLED Fab in 4Q
BOE (200725.CH) is now expected to begin production on the first phas4e of its Gen 6 OLED fab at the beginning of 4Q this year. This fab, known as B12, will have a total capacity of 48,000 sheets/month, although the initial phase will be 16,000 sheets/month. We had expected the fab to begin operation in July, so this lowers our expectations for this fab this year by ~33,300 m2. As this also pushes back our expected phase 2 and 3 start dates to March and October of 2022, total capacity for this fab in 2022 is also reduced, although we believe the timing for phase 2 and 3 (March and October ’22) is still a variable. BOE has announced plans for a 4th Gen 6 OLED fab in Fuzhou, but that project has yet to be started.
We note that BOE is providing relatively small quantities of flexible OLED displays to Apple for the current iPhone line but has yet to be named as a primary OLED supplier, so it is essential that they continue to increase their OLED capacity to show Apple that they have the capacity to be a reliable primary supplier, particularly in regard to LTPO displays, which are now produced at the B11 fab in Mianyang. The B12 fab will also be capable of LTPO backplanes, which will, in theory, give BOE the opportunity to compete with Samsung Display (pvt) and LG Display (LPL) for that business.
By mid-2023 BOE will have matched Samsung Display’s Gen 6 OLED capacity, in its challenge to unseat SDC as the leading supplier to the iPhone line, with LG Display currently running two 15,000 sheet/month lines in Paju and is expected to start production on a 3rd 15k line in May (tentative), but even with the new line at capacity LGD will have capacity for 45,000 sheets/month dedicated to Apple, along with another30,000 sheet/month G6 line in Gumi that is not dedicated. Given that LG Electronics (066570.KS) has phased out their mobile phone business, LG Display could upgrade the Gumi line to LTPO, but even with that upgrade, they would have a maximum capacity of 75,000 sheets/month, while both Samsung Display and BOE would have 140,000 sheet/month capacity.
One important point that usually gets left out of fab capacity information is yield, which is the basis for actual production volumes and the profitability of the fabs, and BOE has been suffering from lower flexible OLED yields at it fabs for some time. Given SDC’s expansive experience with flexible OLED production, they have a distinct advantage in terms of their ability to meet timeline production targets, something Apple is particularly sensitive about. While some customers might be attracted to BOE’s flexible OLED pricing, which we assume is a bit lower than SDC’s, SDC’s ability to produce at high yields gives them the advantage of reliability and higher margins.
We note that BOE is providing relatively small quantities of flexible OLED displays to Apple for the current iPhone line but has yet to be named as a primary OLED supplier, so it is essential that they continue to increase their OLED capacity to show Apple that they have the capacity to be a reliable primary supplier, particularly in regard to LTPO displays, which are now produced at the B11 fab in Mianyang. The B12 fab will also be capable of LTPO backplanes, which will, in theory, give BOE the opportunity to compete with Samsung Display (pvt) and LG Display (LPL) for that business.
By mid-2023 BOE will have matched Samsung Display’s Gen 6 OLED capacity, in its challenge to unseat SDC as the leading supplier to the iPhone line, with LG Display currently running two 15,000 sheet/month lines in Paju and is expected to start production on a 3rd 15k line in May (tentative), but even with the new line at capacity LGD will have capacity for 45,000 sheets/month dedicated to Apple, along with another30,000 sheet/month G6 line in Gumi that is not dedicated. Given that LG Electronics (066570.KS) has phased out their mobile phone business, LG Display could upgrade the Gumi line to LTPO, but even with that upgrade, they would have a maximum capacity of 75,000 sheets/month, while both Samsung Display and BOE would have 140,000 sheet/month capacity.
One important point that usually gets left out of fab capacity information is yield, which is the basis for actual production volumes and the profitability of the fabs, and BOE has been suffering from lower flexible OLED yields at it fabs for some time. Given SDC’s expansive experience with flexible OLED production, they have a distinct advantage in terms of their ability to meet timeline production targets, something Apple is particularly sensitive about. While some customers might be attracted to BOE’s flexible OLED pricing, which we assume is a bit lower than SDC’s, SDC’s ability to produce at high yields gives them the advantage of reliability and higher margins.
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