​China’s largest display producer BOE (200725.CH) has begun shipping OLED displays for the iPhone 17 Pro, marking the first time the company has been qualified to produce LTPO OLED displays for the top models in the Apple (AAPL) iPhone lineup.  BOE has supplied replacement OLED displays for iPhones and a number of display products but has been unable to qualify for the two top models, which have LTPO displays.  However, because of the ongoing patent infringement suit brought by OLED competitor Samsung Display (pvt), BOE is operating under a bit of a cloud when it comes to Apple products, and Apple has limited BOE’s production to only those iPhone Pro’s to be sold in China.
BOE’s original plans were to produce ~10m phones as part of the 100m units that Apple is expected to ship for the iPhone 17 series, however it is now expected that the number will be between 2m and 3m because of the location limitation, leaving the remainder to be  split between Samsung Display (52-54m) and LG Display (LPL) (42 – 44m).  Apple is between a rock and a hard place this year as it is thought that BOE is offering a steep discount in price on their production, helping to boost Apple’s margins or give it some room for discounting, however at the same time Apple is also very wary of BOE’s patent infringement loss, and cannot take the chance that there will be any limitations put on sales of BOE’s displays in the US.  They can still use BOE’s pricing to extract some blood from SDC and LGD but without the threat of making BOE a full volume competitor this year, the effect is limited, especially as BOE is a first time supplier for the iPhone Pro model using LTPO and is therefore expected to have low yields relative to SDC and LGD, who have been producing these models in years past.

With Apple (AAPL) confirming the date of its next event (September 9) the rhetoric about the iPhone 17 line continues to grow.  We see, on a daily basis, “The 5 Improvements Apple will make for the iPhone 17..” or similar headlines with the same leaked or speculated changes that have been detailed hundreds of times over.  Some of these change reports are supported by ‘industry professionals’, or ‘those with knowledge of the matter”, or even ‘conversations with suppliers’, although we expect that Apple has control over most of these sources and uses them strategically to generate excitement leading up to the event. 
Rather than dwell on these changes, most of which seem rather mundane,  we look more toward the effect the iPhone 17 series will have on the smartphone ecosystem.  The Korean research firm UBI has been kind enough to share its thought on the production of displays for Apple smartphones this year and next, which we highlight, rather than dwell on whether the iPhone 17 will come in 3 colors or 4.  As we have previously noted, iPhone displays ae typically produced by three suppliers, Samsung Display (pvt), LG Display (LPL) and BOE (200725.CH).  There have been other in the past (Sharp (6753.JP), Japan Display (6740.JP), etc.) but when it comes to OLED displays, the three named above are the key suppliers.  Unfortunately not all sources agree on the percentages for each, but we have pulled together an amalgam of data that is a composite of the industry estimates for the past six years along with UBI’s projections for this year and next.  We note that due to averaging not all years equal 100%..

​While Samsung Display’s share has been declining, we note that the sales value of each iPhone model are different and in most years SDC was the dominant or sole display supplier of the higher value models while BOE tends to provide the more generic lower value models, skewing the sales value in SDC’s favor each year.  In most years SDC maintains its current year share, while ceding some earlier year production to others.  BOE has had a difficult time competing with its South Korean rivals as it has had qualification issues that have limited its production in the past, particularly on high-end models.   In 2022 it was found that BOE made a change in the design of the iPhone 13 it was producing without Apple’s authorization, for which it was punished with reduced shipment targets that year.  But Apple needs BOE to keep display costs down and rein in Samsung’s premium pricing, and based on UBI’s forecasts, despite the issues, BOE seem to be making progress toward establishing a firmer relationship with Apple, barring an legal issues[1].
One additional point.  Samsung recently won the exclusive contract to supply both the display and the hinge to Apple’s foldable phone in 2026, although LGD and BOE are expected to supply the non-foldable display on the device, although the proportions have yet to be decided.  We expect this will improve SDC’s production share with Apple despite the relatively small number of units to be produced, as the foldable display will carry a significant premium.


[1] Samsung recently won an ITC ruling that could make it more difficult for BOE to supply certain displays in the US.

Yesterday we mentioned a ruling by the International Trade Commission (ITC) that implemented a cease & desist order concerning certain display panels that BOE (200725.CH) Technology Group has been importing into the US.  On the CNinfo website, a key platform for Chinese company disclosure, BOE responded to the following questions from investors:
According to Korean media reports, the ITC has preliminarily ruled that your company has infringed Samsung's rights and banned the sale of some products in the United States. If this is true, what impact will it have on your business objectives? What impact will it have on your company's continued operations?
Thank you for your attention. BOE will actively file a review with the ITC regarding the preliminary ruling of the current US International Trade Commission (ITC) administrative judge on the trade secrets 337 investigation. At the same time, we will also actively safeguard the rights and interests of the company. BOE has always advocated a cooperative and win-win attitude of competition and actively safeguarded the healthy development of the global semiconductor display industry. In the final ruling of the patent 337 investigation, the ITC has determined that BOE has not violated the 337 clause.
In passing we noticed a number of other questions that the company answered:
Does the company have plans to enter the OLED TV field?
Hello! The company has no such plan for the time being. According to the data from consulting agencies, the penetration rate of OLED technology in TV applications is currently low. Thanks to the continuous advancement of LCD product technology, product performance continues to improve while costs are also decreasing. The good cost-performance ratio makes LCD products occupy the mainstream demand in medium and large-sized application fields such as TV for a long time in the future. As LCD display products with Mini LED backlight gradually become popular, the performance and vitality of LCD products will be significantly improved. Thank you!
Will the company acquire HKC (248.HK)?
Hello! The company does not have the plan you mentioned yet. Thank you
What is the company’s OLED shipment volume in the first quarter of 2025? What about foldable screen shipment volume? Considering the large discrepancy between the data from the three-party agencies, it is recommended that the company disclose the OLED shipment data in a timely manner to set the record straight.
BOE A: Hello! The company’s flexible AMOLED shipments in the first quarter of 2025 will exceed 36 million pieces. Thank you!
And some that it did not answer:
Could you please tell us what products your company exports to the United States?
Hello! Regarding the recent series of US tariff policy adjustments, considering that the company's direct exports to the US and direct imports from the US are relatively small, the direct impact on BOE is currently limited. We will closely monitor the impact of the policy release on the global economy and trade fluctuations, actively formulate and adjust response strategies, evaluate the opportunities and challenges brought to the industry and industrial chain, and accelerate the development of market growth potential in the opportunity area. After more than 30 years of steady development, BOE has always adhered to the path of marketization, internationalization and specialization. At present, our subsidiaries are widely distributed in nearly 20 countries and regions around the world, including the United States, Germany, Japan, South Korea, Singapore, India, Brazil, and the United Arab Emirates. We have established in-depth cooperative relationships with more than 5,000 global ecological partners, fully demonstrating BOE's strong competitiveness and resilience in the global market. Faced with the complex and changing international environment and the potential market challenges it brings, BOE has established a complete response mechanism. On the one hand, we have formed a special team to actively carry out attention, pre-research and filing work on various potential risks to ensure that changes can be captured at the first time and responded to in a timely manner. On the other hand, the company has taken a series of specific measures to enhance its risk resistance, including continuously increasing R&D investment, further optimizing product structure, deepening strategic cooperation with global customers, actively exploring the diversified layout of overseas sales channels, etc., to form a diversified and comprehensive response strategy system. BOE is confident that it will work with partners to build a fair and win-win global industrial development ecosystem, steadily respond to various challenges in the future market, and achieve high-quality and sustainable development of the company. Thank you!
​

​As we have noted, there is no love lost between Samsung Display (pvt) and Chinese display producer BOE (200725.CH).  The two have been at odds for years with SDC trying to protect its OLED leadership status against BOE’s aggressive push to become one of Apple’s (AAPL) main display suppliers.  While BOE’s relationship with Apple has had its ups and downs, SDC makes no bones about its feelings toward BOE and has taken the company to court a number of times over the years, usually concerning intellectual property issues or more general unfair trade practices.  In one of the most recent cases, which was brought before the US International Trade Commission, a Final Initial Determination was made last week that leaves the next step up to the US President.  Typically the presidential review is completed within 60 days at which point the president signs the order, leaving BOE 60 days in which to file an appeal with the US Court of Appeals for the Federal Circuit.
The Appeals Court can overturn the ITC ruling on either the merits  or procedure, although they tend to follow the ITC’s factual findings.  They make their review de novo, meaning without deference to the ITC’s interpretation of the law, so there is always some chance for a reversal concerning infringement or IP invalidation.  An adverse ruling from the appeals court can also be appealed with a rehearing request or can even be appealed to the US Supreme Court if more than 4 Supreme Court judges choose to hear the case.  At least for now, the decision initiates a limited exclusion order and a Cease & Desist during the Presidential review, along with a cash bond, so the devices in question can no longer be imported into the US.
While these cases seem to go on forever, we expect this one is finally getting near a close after more than two years of legal wrangling.  While the courts have ruled in SDC’s favor thus far, they have not gone as far as forcing BOE to pay for the potential loss of business that Samsung Display alleges, with the court’s point being that no US company was directly hurt by BOE’s infringement.  While certainly a win for SDC, it looks like the best they get out of the time and expense is forcing BOE to stop supplying certain displays to customers that sell in the US, a victory but almost a pyrrhic one.
Here's the ITC’s comment on the ruling: ”(“Respondents”) have violated subsection (a)(1)(A)(i) of section 337 of the Tariff Act of 1930, in the importation into the United States, or in the sale of certain organic light-emitting diode display modules and components thereof by reason of misappropriation of trade secrets, the threat of which is to destroy or substantially injure a domestic industry or to prevent establishment of an industry in the United States.
The decision itself recommends: (1) a Limited Exclusion Order (“LEO”) with a standard certification provision after a Commission determination on imported products that are manufactured without the use of the misappropriated trade secrets; (2) a Cease-and-Desist Order (“CDO”) against each Respondent, both domestic and foreign; and (3) a bond of 100% during the Presidential Review Period (“PRP”).  In other words, stop selling the infringing displays.
 

Samsung Electronics (005930.KS) and BOE (200725.CH) have had a contentious love-hate relationship.  There have ben times when Samsung has purchased multiple millions of LCD display panels from BOE as they do from a number of large panel suppliers each year since Samsung Display (pvt), Samsung’s display production affiliate, exited the large panel LCD business years ago.  At the same time, Samsung Display has sued competitor BOE a number of times for IP infringement and competes directly with BOE for business with Apple, SDC’s largest external customer.  Despite the ongoing battles between large panel producers, Samsung Electronics must procure LCD TV set panels from outside sources in order to maintain the company’s production of roughly 40m sets each year, a large portion of which are LCD type.
In recent months, Samsung Electronics and Chinese supplier BOE have been at odds over advertising fees that have kept Samsung from purchasing LCD panels from BOE. Such fees are charged by Samsung to suppliers for including the panel manufacturer in Samsung’s advertising, with the idea that the cost of the advertising should be borne by all of  those who benefit from it.  This is a fairly standard practice in the industry and can influence where logos are placed, what type of advertising is featured, and a variety of other issues, all of which are part of volume and price negotiations.  In May, when BOE and Samsung managements last met, they were unable to agree on such fees, which we believe BOE does not believe  it should be paying.
It seems that BOE is going to try again later this month and will be meeting with Samsung in Korea to try to develop a plan for supplying panels to Samsung once again.  They hope to fill in a gap caused by a Samsung rule that keeps it from purchasing more than ~30% of its TV set panels from a single panel producer.  This is a result of the fact that LG Display (LPL) sold its Guangzhou, China fab to Chinastar (pvt) at the end of March.  As Samsung had already been purchasing LCD panels from Chinastar (~23%) and LG Display (13%) last year, when Chinastar took over the Guangzhou fab, it has the potential to push Chinastar’s total over 30% and Samsung needs to keep that total at 30% or less.  We assume BOE is aware of that issue and is trying to use it to gain entry back into Samsung’s good graces.
BOE is expected to propose that it supply Samsung Electronics with 20m panels over the three-year period between 2026 and 2028.  Additionally, in this round of negotiations,  BOE is expected to agree to pay a portion of the advertising costs, but what BOE proposes and what Samsung is willing to pay for the displays is still going to take some negotiating on BOE’s part.  Samsung does have the option of increasing purchases from its other suppliers.  Whether the ongoing lawsuits enter into the discussions remains unclear, especially as those suits tend to be between Samsung Display and BOE, not Samsung Electronics, but BOE seems intent on regaining its place in Samsung’s supplier roster, from which it was missing in 2024.  If nothing else, we give them credit for their determination.

China has a somewhat unique system for investors who wish to communicate with companies they are thinking of investing in or already own shares.  They have an online platform where investors can ask questions of company management and hopefully get answers .  Not all companies answer questions, and not all questions are answered, but it does give a unique window into what investors are thinking about specific companies.  We check those sites to see if there is any unusual change in sentiment or if the company has mentioned something significant (rarely) and we took a small poll at last night’s peak at the Q&A for BOE, China’s largest display producer.
We looked at the first 19 questions that were asked by investors that were answered by the company.  Out of those 19 questions, the score was as follows:
14         What are you doing about the poor return on shareholder value?/Market Value?
3           How will your all-in-one IoT products gain traction as there are many competitors already?
1           I question the authenticity of your financial data./Potential fraud.
1           Will you purchase production line equity as did Chinastar?
With 73.7% of the questions on the first two pages of the answered Q&A concerning the poor stock market results of the company shares, it seems quite obvious where the mindset of BOE investors lies currently, and we note that this is not as common as one might expect.  Looking back at other times, questions have been based on specific topics that are the focus of a BOE announcement or an article in the Chinese trade press.  While there is always some complaining about investor return, this time it was unusually large and rather vitriolic.   As noted, the company rarely makes specific comments as they might be construed as material information, but gives the usual party line, which they often repeat word for word in subsequent quesions. 
Here is an example (Fraud’ question):
Hello, Secretary Dong: I am an individual investor. Regarding your annual report released on April 15 and the first quarter performance forecast that met market expectations, the stock price has been falling. As an investor, I question the authenticity of your financial data. Is there any fraud? The state requires state-owned listed companies to do a good job in market value management. How do you do market value management? We adhere to value investment. How does your company reward investors?
Hello! The company strictly abides by relevant regulations and fulfills its information disclosure obligations in a timely manner, and there is no financial fraud. The company's achievements today are inseparable from the long-term trust and support of the majority of shareholders. In order to achieve continuous, stable and predictable shareholder returns, the company recently announced the "Shareholder Return Plan for the Next Three Years (2025-2027)", planning to distribute profits in cash each year not less than 35% of the net profit attributable to the parent company's owners in that year; the total amount of funds used to repurchase and cancel shares each year is not less than RMB 1.5 billion (share repurchases for other purposes such as equity incentives will be specially planned separately); consider mid-term profit distribution under certain conditions. In order to implement this return plan, the company plans to distribute cash dividends of 1.87 billion yuan in 2024, accounting for 35% of the net profit attributable to the parent company in the consolidated statement that year; at the same time, it plans to repurchase and cancel A shares of 1.5 billion to 2 billion yuan; in addition, it also plans to cancel treasury shares worth nearly 1 billion yuan, in a multi-level and combined way to effectively improve shareholder returns. According to statistics, from 2015 to 2024, the company has implemented cash dividends for 10 consecutive years, with a cumulative amount of nearly 22 billion yuan; from 2018 to 2024, the company's annual cash dividend ratio has remained above 30% of the net profit attributable to the parent company for 7 consecutive years, allowing investors to share the growth results with the company. From 2020 to 2024, the company's cumulative payment for repurchasing A shares exceeded 5.6 billion yuan, and the cumulative payment for repurchasing B shares was nearly HK$1 billion. With the company's further high-quality development, the company hopes to continue to share growth dividends with shareholders and achieve mutual benefit with shareholders. Thank you!

The Q&A forum is an interesting way to see what more aggressive investors are thinking, while also understanding that the forums can be used by short sellers, angry shareholders, and just about anyone, to plant negative stories and ideas, which then become obligatory for the company to respond to.  While like any forum, it’s IIWII (It is what it is), but it is an interesting idea for US companies, who will immediately say “it takes too much time to respond and most of the questions are ridiculous”, but it does give some insight into what rank and file investors are thinking.  Whether the company cares is another question.
Side note:  In asking Gemini to create the final image below, we used the following prompt: “Can you create an image of an angry shareholder holding a stack of papers while banging on a table at a corporate shareholders meeting?” Once the original image was created, we asked Gemini to change the investor to one who is Chinese as this references BOE.  It made the change, however not without a slight modification.  We corrected it for the final image, but it points to the fact that AI image generators do not have any understanding of the physical world, even if their training images depict it in a certain way.  They match what they have ‘seen’ in training data to what the prompt requested but sometimes forget that no matter how angry we might be at a company management, we don’t have 3 arms.

​Way back in April of 2022 we noted that Visionox (002387.CH) had been trying to develop a system for producing OLED IT products on a Gen 8.6 production platform, rather than on a Gen 6 line, where they are usually produced.    There were others doing similar work, particularly Samsung Display (pvt) and BOE (200725.CH), both of whom have gone on to attempt construction of same currently.  Visionox itself announced last August that it would be constructing its own Gen 8.6 OLED IT fab, although details were slim.  Ostensibly, Visionox was to forego the typical fine metal mask OLED material deposition system, in favor of the company’s proprietary lithography OLED deposition system known as VIP (Visionox Intelligent Pixelization) as a differentiator, but the display grapevine indicated soon after the initial announcement that Visionox was planning to open its first Gen 8.6 line using standard FMM deposition tools and was proposing to initiate VIP at a later stage in order to maximize yield as early as possible.
The Visionox fab is still in the planning stage, which typically requires that at least the initial construction phase be funded.  In China , most display projects are financed by both the company involved and the local government, in this case 20% from Visionox and the remainder from local or provincial governments or similar state-run or affiliated funding sources.  Depending on the type of project (LCD, OLED, Micro-LED, etc.), project details, and point in the current display-type maturity cycle, funding can usually be plentiful and easily obtained, but as each display technology matures, funding becomes less available and more strict as to the necessity for financial results.
For example, in the early days of OLED display production, with only two OLED producers, China’s BOE was given almost carte-blanche in terms of capital to build an OLED fab to compete with South Korean producers.  A number of Chinese provinces competed for the fab, which wound up in Ordos, a city in Inner Mongolia, an unlikely place for a display fab.  The location became viable when the local government offered 1 billion metric tons of coal as an additionsl one-time incentive to BOE if they were to build in Ordos, as it was both a potentially valuable asset to the region and a large employer in what is typically an agricultural and mining region of China.  We know that BOE sold at least 400 to 600m metric tons of the coal in later years to raise between $1b and $1.6b in capital. 
That was ~10 years ago and things have changed as there are dozens of OLED fabs in China and around the globe and while the industry continues to grow, it faces the same maturity funding constraints as other technology industries.  In fact, Visionox seems to be facing a difficult time developing funding for its Gen 8.6 IT OLED project, as it would seem that even in China, funding for another fine metal mask deposition OLED fab, even a Gen 8.6 OLED fab, does not seem to generate the funding enthusiasm it did in the past, so Visionox is reconsidering the more difficult task of creating an initial Gen 8.6 OLED line using VIP technology, something that could put China ahead in the OLED space, rather than ‘just another’ FMM fab. 
If Visionox were to be successful in developing a commercial IT OLED line using photolithography, the funding sources and the government organizations that supported the project will gain considerable credibility with the state, but even a fine metal mask Gen 8.6 IT OLED fab will put the prject about 2+ years behind competitors, one of whom is BOE who is already being funded for such a project.  Perhaps Visionox management got the hint that funding for another Gen 8.8 IT OLED fine metal mask fab might not be forthcoming, while a more advanced VIP fab could see the light of day.  The equipment suppliers needed for a fine metal mask type fab were recently invited to a Visionox project preview but remain confused as to what path Visionox is going to take.  To use FMM seems pointless and potentially unfundable, while a VIP fsb seems to be attracting the attention needed for the $7.6b fab. 

Samsung Electronics (005930.KS) and BOE (200725.CH) are rivals, not quite directly but Samsung Electronics’ affiliate Samsung Display (pvt) competes head-to-head with BOE in the small panel display market and to a lesser degree in the large panel TV space.  As we have noted, Samsung Display has been at loggerheads with BOE over IP issues and after a recent partial win concerning BOE’s misuse of Samsung trade secrets and IP, Samsung Display continues to fight BOE in the courts.  That said, Samsung Electronics also has issues with BOE.  As the largest TV set producer, Samsung Electronics, requires that those who use “We supply to Samsung Electronics” in their advertising, pay a royalty.  In 2022 BOE, who was the second largest supplier of TV panels to Samsung in 2021, refused to pay and Samsung has reduced BOE’s share as a TV panel supplier considerably since that time as they continued to battle over the royalty situation.
It seems that the President of Samsung Electronics TV division is scheduled to visit China in the middle of May, and BOE officials are expected to visit Samsung in Korea, with both expected to try to negotiate an agreement between the two on both panel prices and royalties.  The idea is that BOE can either lower panel prices to compensate Samsung or can leave panel prices the same and pay the royalty. 
While this seems reasonable, it might not be to BOE, who is also a major supplier to LG Display (LPL), Samsung’s local rival.  LGD has recently sold it’s last LCD TV panel plant (Guangzhou, China) to Chinastar (pvt), also a supplier to both Samsung and LG (066570.KS).  The large panel product that was being purchased from the LGD Guangzhou fab before the sale, would now become purchases from Chinastar.  Samsung has an internal requirement that no supplier of key materials can represent more than 30% share, and that means that it will have to maintain that 30% restriction, keeping it from purchasing panels from the Guangzhou fab now under the Chinastar banner.  While there are other large panel producers, such as AUO (2409.TT), Innolux (3481.TT), HKC (248.HK), and CHOT (pvt) that Samsung already buys panels from, Samsung tends to go with suppliers that have large capacity, leading to a secure supply, without violating the share limit..
At least to a degree, this puts BOE in the catbird seat or at least gives it some room to negotiate with Samsung, as Samsung Display is out of the large panel LCD business and supplies only QD/OLED TV panels to its parent which make up only a small portion of Samsung’s TV panel needs.  This leaves Samsung Electronics to outsource all of its LCD TV panel purchases.  As they cannot increase purchases from Chinastar without overstepping their limit, BOE is the obvious choice if they can come to an agreement over royalties.