Remember when LTPS was touted to be replacing a-Si, or when LTPO was touted to be replacing LTPS?  Probably not, but once again rumors that Apple (AAPL) has decided to focus on a new  display technology have stimulated speculation that a change is afoot.  These are not really display technologies, they are backplane technologies, the circuits that tell the pixels in n OLED display when to turn on and how bright to shine.  Without them the screen would remain black.
What is an OLED Backplane? Defining the Core Display Technology
These semiconductor circuits, known as thin-film transistors (TFT), are based on either silicon (two forms) or an oxide of Indium, Gallium and Zinc, each having specific and distinct characteristics that allow panel producers to fir them to the needs of the display.  But before we go into why this is important, a minute on what these circuits do.
Crucial Function

• OLED pixels are made up of three sub-pixels, one red, one green, and one blue.  By mixing these colors in precise proportions millions of pixel colors can be formed. 
• A 4K display has 8,294,400 pixels made up of three subpixels each, for a total of 24,883,200 little dots of color that need to be told when to got on, for how long, and at what brightness level. 
• The display backplane take the detailed information about the color and brightness of every pixel and translate that into a sequence of signals that tell every sub-pixel what to do.  This means that every one of the 24,883,209 sub-pixels gets that information every 1/90th of a second, essentially  over 2.2 billion times each second.

The characteristics of the backplane makes a vast difference to the performance of the display.
The Battle of Backplane Materials – Electron Mobility
Among the most vital characteristic of OLED backplanes is electron mobility, or the ability of an electron to move through a material.  High electron mobility means that electrons can travel rapidly and that translates to higher switching speeds, essential for high resolution (more pixels) and high refresh rate displays.  The structure of the material gives an indication of how easily electrons move through it, as randomness and imperfections cause electrons to lose momentum.  Therefore, on a general basis, the more structured the material is, the faster electrons can move through it. 
A-Si & LTPS
Amorphous materials (a-Si) have low electron mobility as they are randomly structured, but  when a film of amorphous silicon is annealed with an excimer laser the silicon melts and reforms in a crystalline structure (LTPS) increasing its electron mobility along with the cost, but a necessary step for higher resolution displays.
IGZO & HMO
Rather than a silicon base, IGZO (Oxide) materials combine Indium, Gallium, Zinc, and Oxygen by bombarding it with plasma (sputtering).  The material, after sputtering, is amorphous, but is then annealed, removing defects.  IGZO is ideal for backplanes in mobile devices as it consumes less power than LTPS, but there is a new material on the horizon that fulfills that same low power metric but has an even higher electron mobility and is easier to produce.  It is known as HMO (High Mobility Oxide) and Apple seems enamored with this material and is believed to have decided to use it for its displays once research has been completed.

Conclusion: The Role of High Mobility Oxide (HMO)
HMO's core function is to be the best-of-both-worlds backplane, achieving High electron mobility (like LTPS) to support high-resolution and high refresh rates, while maintaining the ultra-low leakage current essential for superior power efficiency and Variable Refresh Rate (VRR) capability (down to 1 Hz).
The Strategic Advantage

1. Cost and Simplicity -  It provides a path to power-efficient VRR displays with a single oxide material, avoiding the complexity, high cost, and multiple processing steps required to fuse LTPS and IGZO on the same panel (LTPO).
2. Scalability - Unlike LTPS, which is constrained by laser annealing, HMO processes are more easily applied to larger glass substrates (Gen 8 and beyond), making it suitable for larger displays like tablets, notebooks, and TVs.
3. Future Standard: HMO is positioned to be the preferred backplane for future high-performance, low-power devices (including VR/AR and premium mobile), as its performance closes the gap with LTPS while simplifying manufacturing compared to LTPO.

Sharp (6753.JP),a major backer of IGZO, and Japan Display (6740.JP) have been promoting the use of HMO in mobile devices, but even the slightest mention that Apple is potentially moving toward mass adoption of the technology will spur other panel producers to step up their R&D on the material.  Knowing what it does and how it works is the key to understanding the potential implications that adoption by a major CE player might have on the backplane ecosystem.

Back on 2/27/17 we noted that Samsung Electronics (005930.KS) had verified that it would release a new Galaxy Tab S3 at Mobile World Congress, returning its tablet business to OLED displays.  Samsung had used an OLED display in its Tab s (7/2014) and Tab S2 (9/2015), but returned to LCD technology for the Tab A (3/2016) and Tab E (1/2016).  We believe Samsung Display (pvt) will be sticking with OLED displays for new tablet models and is considering using OLED for some laptop production this year.

We believe Samsung Display will be converting at least a portion of its L6 LCD production line from a-Si[1] to Oxide[2] backplane production and OLED display lines.  The L6 fab had a raw capacity of 268,125 m2 as of November 2016, which represented 7.5% of Samsung Display’s overall capacity, and 1.3% of worldwide capacity, and we believe had begun to reduce production on at least one of the three L6 lines at the end of last year.  We expect that line to be closed by May and the conversion to Oxide and OLED to begin.  We expect phase 1 of the oxide conversion to be fully ramped by April/May 2018, with lower output levels beginning this summer, and the ramp down of L6 phase 2 starting in July of this year, completed by year-end, and the conversion of L6 phase 2 to be completed by July/August 2018.  The L6 phase 3 ramp down will begin at the end of this year, with the conversion completed by 1Q 2019.

Samsung Display has yet to signal whether the L6 conversion will change the substrate size from Gen 5, so we build the changes into our model using a Gen 5 format.  As the upgraded fab will be supplying both IGZO backplanes and OLED displays, we expect the actual OLED capacity to be considerably lower than what the fab had been producing for LCDs.  We believe that Samsung will shift its LCD tablet and notebook production to its L8 Gen 5.5 lines, albeit at a reduced rate, as it continues to supply Apple (AAPL) with panels for the iPad, along with Sharp (6753.JP) and LG Display (LPL).

While expectations are that Samsung will release the previously mentioned Galaxy Tab S3 this month, there have been rumors that they will also release a Win 10 tablet line this year, although that remains unconfirmed, and we believe has supplied OLED displays to HP (HPE) and Lenovo (992.HK) for their Spectre  and Yoga Thinkpad laptops.  But the laptop market is far different than the smartphone market, and the necessity for OLED displays is less urgent than for smartphones, where the device is on for a large portion of the day.  That said, there was little OLED capacity for laptop display sizes, and yields were lower than those for smartphones, so Samsung Display had less of an incentive to expand that segment.  So what makes Samsung Display willing to step up its ‘non-smartphone’ OLED production capacity?  Most likely it is interest from Apple for its iPad line, and while an immediate move to OLED would be somewhat premature, Samsung Display could be responding to both its parent company’s demand and the potential for Apple to move to at least an OLED iPad variant sometime in the future.  Apple will be announcing new iPads at a press event in April.

All in, Samsung Display and parent Samsung Electronics, continue to push OLED displays further into their mobile lines, and reduce their exposure to LCD in small panel devices.  If we are correct in our assumptions about the L6 conversion, Samsung Display should be able to produce the equivalent of 2.6m 13.5” OLED laptop screens/quarter at the completely converted facility[3].  Apple has been averaging about 11.5m iPad units/quarter for the last two years, so we have to assume that only a portion of the iPad line could be converted to OLED over the next few years, as Samsung Display will also use the new capacity for its captive customer, but even the possibility that Apple might use OLED for its iPad line keeps a fire burning under the OLED space, and will continue to drive Samsung Display and others to add capacity.



[1] A-Si – amorphous silicon – commonly used as an LCD backplane
[2] Indium Gallium Zinc Oxide – aka ‘Oxide’ – another type of backplane
[3] 100% yield – Actual rates will be lower