China’s largest panel producer BOE (200725.CH) has been selected by Apple (AAPL) to be the primary supplier of displays for the upcoming iPhone 17e variant that is expected to be released in late February or early March of next year.  As the primary supplier for the iPhone 16e, BOE maintains the top producer status for this iPhone model.  This is vastly different from BOE’s status as a display producer for the rest of the iPhone line (iPhone 17, iPhone 17 Pro, iPhone 17 Pro Max) where BOE has faced production stability issues that have limited its display production for these premium devices.
Apple is expected to order ~8 million 17e units in the 1st half of 2026, a relatively small amount considering the three iPhone 17 series models are forecasted to ship ~89 million units this year (see “Down But Not Out” for details), but understanding the difference between the iPhone 17 series and the iPhone 17e gives a better understanding of BOE’s real position in the Apple supply chain.
Defining the 'e' Series: Apple's Strategy for Mid-Tier Competition
In order to compete with other brands for mid-price tier smartphone customers (particularly Chinese smartphone brands) Apple created the ‘SE’ model designation, which has now become the ‘e’ model series.  The SE/e series is an entry level smartphone that was and is considered ‘budget friendly’ or ‘more affordable’ by the industry.  Rather than make this lower priced model an official part of the iPhone flagship series lineup, Apple separates the ‘e’ series with a number of feature changes to preserve the premium status of the main iPhone line.
Component-Level Differences (The Feature Gap):

• Early release date – Typically announced in 1Q relative to the standard early 4Q release for the three main iPhone models.  This keeps the ‘e’ series from competing directly with the flagship iPhone 17.
• Lower Price - Typically ~25% lower than the base model iPhone 17, putting it in a better position to compete with the slew of mid-tier smartphones that are typically released or announced at the end of 1Q
• Lower Component Cost - The ‘e’ series is thought to incorporate refurbished parts (unconfirmed) and has a single main camera and a relatively small selfie camera, while the iPhone main series has a number of cameras and lens configurations.  There are also some design changes that relative to the flagship series that help to reduce costs.
• GPU (Graphics Processing Unit) Step Down  - The ‘e’ series has the same Apple processor (A18) but with fewer graphics processing cores in the ‘e’.
• Display – Based on the chart below it can be seen that the display on the SE/e series tends to be smaller than the flagship model, and therefore less expensive, with the tendency for Apple to use displays from older flagship models for the SE/e series.  We note also that the backplane (Thin-film transistors that drive the display) are typically configured using LTPS (Low Temperature Poly-Silicon), a lower cost but less flexible technology backplane technology  While the table shows LTPS for the iPhone 16, LTPO (Low Temperature Poly-Oxide), a more versatile technology was used for the higher priced iPhone 16 models.  In 2025 all flagship iPhones used that technology while the iPhone 16e did not.  We expect the same in 2026.  This is a key factor in why BOE is not a major supplier for the flagship line as they have been unable to produce LTPO OLED displays to Apple’s specifications.

​Why Apple Needs BOE (Supply Chain Strategy)
While BOE has yet to become qualified at Apple to produce flagship LTPO  OLED displays, there are a number of reasons why BOE was chosen as the primary supplier for the 17e variant.

• Broaden Supply Chain - Apple has a strong focus on broadening its small panel display supply chain.  Apple’s display specifications are rigorous, along with strict rules concerning display production performance.  This leaves few panel producers able to meet Apple’s high volume needs and an unusual dependence on both Samsung Display (pvt) and LG Display (LPL) as display suppliers for the flagship iPhone line.
• Largest OLED Producer in China - BOE is the largest small panel OLED producer globally and the largest producer of OLED displays in China.   When it comes to small panel OLED volume on a more generic basis, BOE is the global volume leader, allowing Apple to use their lower-cost model to put pressure on display pricing with its other suppliers and maintain a lower cost structure for entry-level devices.
• OLED Expertise - BOE has considerable expertise in producing LTPS (Low Temperature Poly-Silicon) OLED displays, which are lower cost alternatives to the LTPO displays in the iPhone 17, Pro, and Pro Max.  BOE supplied ~40 million iPhone displays in 2024, primarily for older models and replacement displays for refurbished phones, with few for then current flagship models.

The LTPO Challenge: Why BOE is Excluded from the Flagship iPhone 17 High-End Models
BOE has had difficulties producing LTPO (Low Temperature Poly Oxide) on a consistent basis.  As the three main iPhone 17 series models are expected to use LTPO OLED displays in 2026, BOE has essentially been left out of display production for these models until it is able to prove its ability to maintain consistency in LTPO production, leaving Samsung Display (pvt) and LG Display (LPL) as the primaries.
Conclusion/Summary
China's largest panel producer, BOE, has been selected as the primary display supplier for the upcoming iPhone 17e, a role it maintains from the iPhone 16e. The 'e' series is Apple's entry-level, budget-friendly smartphone, typically released early in the year with a lower price point and featuring older/lower-cost components, such as LTPS (Low-Temperature Poly-Silicon) OLED displays.
BOE's prominent position in the 'e' series supply chain is attributed to its global volume leadership and expertise in producing these LTPS OLED panels, which allows Apple to broaden its supply chain and exert pricing pressure on other vendors.
However, BOE's participation in the higher-volume flagship iPhone line (iPhone 17, 17 Pro, and 17 Pro Max) is limited because these models utilize the more advanced, power-efficient LTPO (Low-Temperature Polycrystalline Oxide) OLED technology. BOE has faced production stability issues and has been unable to consistently produce LTPO displays to meet Apple's rigorous specifications, leaving the supply for the flagship models primarily to Samsung Display and LG Display.

The Outlook
​

On a longer-term basis, we expect 2026 to be a mixed year, with display shipment growth within a range between -2.4% and +0.5%, with the lean toward the negative.  This will reflect on panel producer utilization rates, which we expect to be lower than this year, especially early in the year.  We do expect area growth in 2026 to be between 2.5% and 3.7% as ultra-large displays (~100”) grow as a percentage, but we caution that we expect average area growth to slow over the next few years as physical limitations keep ultra-large sets from growing larger.  On the plus side of the average panel area equation is  less fab depreciation and cost reductions for Ultra-large panels, which should make them more viable to the average customer.  On the minus side are the physical size limitations that these panels require.
Conclusion: Display Panel Market Shifts to Rational Supply Management Amid Demand Volatility
The October display panel shipment data reflects a swift correction in the consumer electronics (CE) market, shifting from two months of unusual strength to a sharp 15.8% month-over-month decline. This drawdown was driven by a combination of weakening consumer spending and an inventory correction by CE brands that had over-ordered in prior months.
Crucially, the response from dominant panel producers, particularly in China, signals the continuation of a strategic pivot toward rational supply management. By reducing fab utilization instead of aggressively cutting prices to maintain market share, a past practice enabled by generous government subsidies, manufacturers are prioritizing stable profitability over volume at all costs. This is a fundamental change in market dynamics, suggesting a healthier, more mature industry outlook less susceptible to catastrophic price collapse or sharp upward movement.
Looking ahead, the market faces a mixed-growth environment in the longer term. While unit shipments are forecast to see minimal to negative growth in 2026, the Area Shipment metric is expected to show positive growth (2.5% to 3.7%). This divergence confirms the continuing trend of larger-sized displays (e.g., 100" ultra-large TVs) driving the average yearly panel size higher, albeit with physical and cost limitations keeping some of that growth in check..
We focus on this trade-off: weak unit demand points to consumer conservatism, but the strategic reduction in supply and persistent area growth indicates a disciplined market structure that is better equipped to support panel maker financials despite the cyclical headwinds.  While we expect these factors to support a more stable display space in 2026 real consumer demand will drive shipments with a somewhat negative outlook for the 1st quarter.  Inventory levels coming out of the Christmas/New Year holidays will play into that equation, but we are still to early into the holiday season to estimate early 2026 inventory levels.

Apple’s iPhone 17 Display Order Shifts: Samsung and LG Dominate as China's BOE is Sidelined
New data from UBI Research reveal the competition for Apple’s (AAPL) high volume iPhone 17 series LTPO OLED display panels has seen a dramatic shift.  While China’s BOE (200725.CH) was expected to be a major player, initial orders show the company has been almost entirely eliminated from global supply for the latest series  The massive initial order of ~89 million units has been predominantly awarded to South Korean panel producers Samsung Display (pvt) and LG Display (LPL), with BOE slated to supply only 1.3 million units (2% share), primarily for the Chinese market. 
Several factors point to the limiting of BOE’s role in the iPhone 17 series global supply chain:

• Yield Issues and Strict Standards: BOE has faced consistent yield issues with Apple’s advanced LTPO OLED displays in the past. Apple’s famously rigorous technology and production requirements likely proved to be a hurdle for the Chinese supplier
• Patent Infringement and U.S. Legal Liability: A recent ITC court ruling against BOE for patent infringement appears to be a major factor. Supplying displays that infringe on patents, particularly in the US market, creates significant legal liability for Apple. By restricting BOE’s supply to mainland China, Apple minimizes this exposure.

The reduction in BOE's order is a major win for the South Korean tag team. Samsung Display leads with an estimated 57 million units (64% share), and LG Display secures approximately 30 million units (34% share) of the initial iPhone 17 panel order.

BOE: Down But Not Out in the Mobile Display Market
Despite this setback for the iPhone 17 series, BOE is far from defeated.

• Current Supply Role: BOE remains a vital supplier for older iPhone models, shipping 23 million units of previous-generation displays in the first half of this year.
• Price Pressure Leverage: Apple strategically needs BOE, typically the lowest-priced OLED producer, to maintain price pressure on Samsung Display and LG Display. This competition has dramatically reduced component costs. For instance, the price of the current iPhone Pro panel is now approximately $40 (UBI Research), a significant drop from the $55 cost of the iPhone 13 Pro display in late 2021.

This price drop is a remarkable achievement for the industry, considering the current iPhone 17 Pro display is a technically superior, larger (6.3-inch) LTPO OLED panel with a higher resolution and dramatically improved peak brightness (3,000 nits vs. 1,200 nits on the older model). The cost is 27.3% lower despite the superior technology.
The Future of Mobile Display Competition
BOE continues its aggressive growth in the domestic Chinese OLED display business and is a significant competitor on a global scale. While the legal challenges and Apple's strict volume requirements pose significant hurdles, BOE is a tenacious player. The company knows the importance of securing orders from the world's largest purchaser of mobile displays, and while they might be "out in this round," the long-term fight for display dominance is far from over.

LG Display  (LPL) is the sole supplier of W-OLED displays for TVs.  Not only do they assemble and sell TVs made with such displays through LG Electronics, but they sell to a variety of other TV brands, along with replacement displays to others that are not major customers.  In recent weeks we have noted that China’s largest display producer BOE (200725.CH) has visited competitor Samsung Electronics for discussions concerning the potential for supply agreements.  BOE is likely being optimistic about their OLED capabilities given they have a small (2,000 sheet/month) WOLED pilot line in operation, but the company was never one to be concerned about taking an aggressive stance.
This has likely been disturbing for LG Display, who supplies WOLED panels to Samsung Electronics, who assembles and sell same along with affiliate’s Samsung Display (pvt) QD/OLED TVs.  LGD is expected to sell ~900,000 units to Samsung this year with the expectation of an additional 900,000 units next year with the potential for 200,000 or 300,000 more, making Samsung an important customer who has no stated intention of expanding their QD/OLED capacity or producing their own WOLED panels.  The fact that BOE is speaking directly to Samsung, potentially at Samsung’s request would have to keep executives at LG Display up at night.

 It seems that LG Display has sent an official letter to a number of its partners requesting them to take extra precautions concerning the potential leak of information concerning WOLED technology.
"We are strengthening technology and information security due to concerns about technology leaks after recently reading an article about a competitor's W-OLED product development," and "Your company (partners) must also protect technology and strengthen information security based on mutual trust.  If a competitor requests or inquiries about the development or supply of W-OLED components or technologies that you supply to us, and if the components or technologies in question were jointly developed by us and you, or if they are related to information you obtained during the collaborative process, please discuss them with us first before responding to the competitor." 
LG Display no longer produces LCD TV panels and has therefore made an even greater commitment to W-OLED.  With Mini-LED TVs quickly gaining share and quantum dot and Micro-LED technology on the horizon, LGD has a lot to lose if a new competitor appears.  BOE is not yet ready to be such a competitor given its WOLED line capacity and yield limitations[1],  but as said, BOE is an aggressive competitor, and will do almost anything to gain Samsung as a potential WOLED customer.  (We note that they were discussing WOLED monitors with Samsung which are smaller, giving them ~8x the capacity). While we don’t expect any change in the near-term, and more likely Samsung is using BOE to leverage its bargaining position with LGD, LGD has a lot to lose on a longer term basis if they cannot keep BOE out of the WOLED market, and a letter to partners is probably not going to do much.
Our perception of LG Display tech executives, while more aggressive than Japanese or European tech execs, is still one that is rooted in hierarchy, deference, and the avoidance of direct confrontation, while BOE’s management seems aggressive and extremely expansionist.  At this juncture, as BOE decides whether they will take the experience they have gained producing small quantities of WOLED displays, and the experience gained from building a Gen 8.6 IT OLED fab, and challenging LGD’s dominance of the WOLED market, it would serve for LGD to step outside of their lane and push back on BOE’s intentions with some non-culturally traditional behavior.  South Korea lost its domination of the LCD space and is being challenged in the small panel OLED space by Chinese producers, so it is essential that the Chinese are met with every possible roadblock to make it less attractive for them to move outside of LCD production.
 While a more aggressive stance might be thought of as too out-of-character for LGD executives, they seem to be at a crossroads with BOE and we expect an ‘official letter’ just incentivizes BOE to push harder.   The middle of the road is not going to cut it anymore…
 


[1] 8,000 65” WOLED equivalents at 100% yield.  More likely close to half that due to low yield.

The US National Defense Authorization Act (H.R. 3838 -119th Congress) is a massive appropriations bill that sets policies and authorizations for fiscal 2026 for the DOD, security programs for the Department of Energy and the Maritime Administration, and authorizes appropriations for the Defense Nuclear Facilities Safety Board and the Naval Petroleum Reserves.  Most importantly here, it modulates the US defense acquisition system to expedite the delivery of capabilities and materials to our Armed Forces.  The House of Representatives recently passed an amendment to this vast appropriations bill that could have relevance to the CE space.
While the final wording has yet to be published, what we have seen indicates that the bill could bar the Armed Forces from purchasing displays, particularly ‘advanced displays’, such as OLED or more specialized display modalities, if they are backed by the Chinese or Russian government.  Again the exact wording is important and yet to be revealed, but that could easily mean that any Chinese display producer that is receiving government subsidies could be considered to be ‘supported’ by the Chinese government and banned, and we believe all Chinese panel producers receive at least some government subsidies.
Using this amendment, the government could ban all display purchases from Chinese panel producers, giving an advantage to Samsung Display (pvt), LG Display (LPL), both based in South Korea, Sharp (6753.JP), based in Japan, and AU Optronics (2409.TT) and Innolux (3481.TT), both based in Taiwan, along with a number of small panel producers outside of China.  More specifically,  relating to OLED, the amendment would allow the US to ban both large and small OLED displays from all six Chinese OLED producers.  While the DOD categorizes display purchases by program, making it difficult to get a total display spending budget for a particular year, estimates for this year are substantially over $1b. Whether the US government will choose to use this amendment as a bargaining chip in its ongoing trade negotiations with China is yet unknown, but they have it in their pocket if the need it.

Japan Display’s (6740.JP) issues as a supplier to Apple (AAPL) stem from a rigid management who, for some reason, refused to acknowledge that the industry in which it had been a major participant was changing.  At one point JDI was Apple’s leading supplier of displays for the iPhone and other Apple products, yet while it seemed that everyone in the display industry saw the handwriting on the wall when Apple introduced its first OLED iPhone in 2017, Japan Display’s management refused to acknowledge that OLED was and is a valid display technology that has advantages over LCD, and buried their heads in the sand.  By 2020 Apple had converted all four iPhone models to OLED and as a further indication of intent, Apple released the first Apple Watch (Series 0) in 2015 with an OLED display and every Apple watch since has been OLED.
Japan Display eventually got on the OLED bandwagon and in 2019 the company won their first order from Apple for the Apple Watch.  Unfortunately they were quite a bit behind other major OLED players, particularly LG Display, (LPL) who was Apple’s primary OLED watch display provider, and never regained a major supplier position.  More recently after a number of fab consolidations and years of financial missteps, Japan Display pulled the plug on all OLED production, and it seems the beneficiary will be none other than LG Display, who will become the sole supplier of OLED displays for the Apple Watch, despite Apple’s internal rule about single source suppliers. 
One might think that producing 30 to 35m watch displays was not a real business when compared to selling a few million TV OLED panels and a slew of iPhone OLED displays, but when it comes to margins, smaller is better.  Producing large panels generates higher sales dollars but is an extremely competitive business, while designing and producing watch-size displays requires more R&D and design work, allowing for higher margins.  OLED would allow for a premium on top of that, so it seems Japan Display not only missed the OLED boat but also lost what is lucrative watch display business. 
But there is another loser and it’s not Samsung Display (pvt) who is Apple’s primary OLED display provider in general.  BOE (200725.CH) seems to have missed the opportunity to use its vast OLED resources to capture some of the Apple Watch volume that Japan Display was still producing, but no word from BOE as to why they did not seem to be in the running as a potential OLED watch display provider.  Perhaps they are not confident that they can meet Apple’s rigorous specifications, although they do supply OLED displays for the iPhone, or perhaps they lack the expertise needed to squeeze a high pixel count into such a small display, but whatever the reason, they did not seem to be in the running.
What makes this an even more lucrative deal for LG Display is the fact that Apple is expected to increase its order rate for the Apple Watch in 2026 by ~20%, so not only does LGD pickup the Japan Display slack next year but will see an increase of units in addition.  We estimate that Japan Display’s share was a bit under 4.8m units this year, so with the slack and increased volume, LG Display is likely to see a ~35% volume increase in a high margin product that does not require a vast amount of capacity or incremental R&D.
LG Display has a number of other major business lines that have their own margin characteristics, but the mobile display business (Watch and phone) represented 34% and 28% of revenue for LGD in 1Q and 2Q ‘25 respectively, so we expect the dual volume increments will be noticeable, likely more so to margins than overall sales. By itself it’s not going to offset other potential problems LG Display might have next year, but its nice to have something on the plus side as an offset.
 

As panel producers begin production for the upcoming holiday period, they are negotiating with brands for next year’s shipments.   Rather than the rigid contracts that were the mode used years ago, current contracts are flexible and build in clauses that can adjust to changing economic conditions, and tend to include both long-term agreements for more generic panels, and shorter-term metrics for more specialized panels.  Samsung Electronics (005930.KS) is the largest purchaser of LCD TV panels as their display production affiliate Samsung Display (pvt) does not produce LCD panels, and purchases over 40m TV set panels from suppliers each year.  With 8 major LCD panel producers, Samsung has TV set panel production contracts with most, if not all, TV set panel producers.  Depending on the size of the producer, Samsung can represent between 5% and 30% of the producer’s capacity for the year, making these negotiations quite important and critical to the profitability of panel producers.
Years back BOE (200725.CH) was high of Samsung’s list as China’s largest LCD panel producer and among the lowest cost producer for many panels, however competition for Apple’s display business and conflicts over incentive fees reduced BOE’s share of Samsung’s LCD TV panel purchases to between 3% and 4%.  However, after a few visits from BOE officials talk out of South Korea indicates that Samsung and BOE might have settled their differences, giving BOE a chance at bringing it supply contracts with Samsung back up.  Expectations are for BOE to have a roughly 4% share of Samsung’s TV panel purchases next year, but if the settlement rumor proves true, that share could increase to as much as 10% next year. 
Samsung has an additional consideration next year.  LG Display (LPL), a supplier of LCD TV set panels to Samsung, sold their Gen 8.5 LCD fab in Guangzhou, China to Chinastar (pvt), which will reduce LG Display’s share of Samsung’s TV set panel business next year, but at the same time it creates another problem for Samsung.  Now that the Guangzhou fab is owned by Chinastar, who is already Samsung’s largest LCD TV panel supplier, that LGD supply contract is now Chinastar’s, and that pushes Chinastar over Samsung’s ‘production maximum’ .
We expect Samsung settled the conflict with BOE, in part, to give it the option to reduce its dependence on Chinastar and increase it reliance on BOE, leading to the current negotiations.  The production maximum mentioned above is not a legal or financial point, but one of risk, with too much of Samsung’s TV set panel purchases coming from one supplier a dangerous position that has hurt Samsung in the past.  By increasing BOE’s share, Samsung can reduce Chinastar’s share and reduce its overall supplier risk. 
OMDIA breaks out estimates for Samsung’s LCD TV set panel purchases for 2024 and this year, which we show below, along with our forecast of share under two BOE scenarios.  Scenario A is our current forecast, using a conservative share for BOE, while Scenario B is more aggressive, with Samsung reducing Chinastar’s share by increasing BOE’s.  It is too early to tell how this will play out and Samsung does not have to make a final decision yet but given the number of units Samsung is expected to purchase next year (40m+) the stakes are high.

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.

​LG Display (LPL) opened up a line of speculation when it announced a ~$925m (US) investment in advanced OLED technology.  Grist for almost any speculation, a recent theory has been that LG Display is considering using a photolithographic process to produce IT OLED displays, potentially the process sponsored by Japan Display (6740.JP) known as eLEAP.  We note that we expect every major panel producer is doing at least basic research on using photolithography to produce small to medium sized displays but LG Display has been in the unusual position of not having the financial wherewithal to commit to the Gen 8.6 OLED fabs that are already being built by Samsung Display (pvt) and BOE (200725.CH) for the purpose of producing IT OLED displays.  This has been thought to be a stumbling block for the company in terms of their ability to compete for IT OLED display business, particularly from Apple (AAPL).
The potential multi-billion dollar commitment that is necessary to build such a fab is a serious one and until recently was one that LG Display could not have made, so the question then becomes does LG Display now commit to taking on debt or diluting its equity in order to join the competition, even though it will likely be 12 to 18 months behind its competition, or does it look for alternative avenues in which to compete?  We expect the latter for the following reasons:

• After paying down debt, using the proceeds from the sale of the company’s Guangzhou LCD fab, and the financial pressure that debt put the company under, we expect the board is looking for alternatives to adding back debt. 
• As opposed to SDC and BOE, LG Display has been developing and producing some of the OLED structures that are essential to Apple’s longer-term OLED display development for quite some time, and is producing them on its Gen 6 OLED production line.  We expect that eventually SDC and BOE will be able to produce IT OLED products more efficiently on their new Gen 8.6 lines, when they are in mass production, but not only is there a long learning curve with this new OLED format, but there is no guarantee that there will be enough volume to run the lines at a profitable utilization rate or yield.
• We would expect that LG Display is looking for alternatives to such a large and risky commitment, and their  recent $925m spending commitment to ‘next generation’ OLED would likely lead to something other than a new large scale commitment to  existing mask oriented  Gen 8.6technology.  Photolithographic OLED deposition is also risky, as it is a process that has yet to be put into mass production, but it also bypasses some of the limitations that continue to make current OLED production expensive and less competitive to LCD technology.

              Sidebar – In current large panel WOLED production a number of the materials in the OLED stack are deposited using ‘non-patterned’ techniques like VTE (Vacuum Thermal Evaporation), spin-coating, or ink-jet printing, as the definition of sub-pixel color comes from a color filter rather than the specific OLED material color.  In the OLED photolithographic process, many materials are deposited in the same manner, with the lithographic steps removing material to form specific sub-pixels of each color.  It’s not that the equipment would be identical, but that it would be similar for these early process steps, and that means equipment companies don’t have to develop new tools from scratch, keeping costs lower.

• There are a number of developed OLED photolithographic systems vying for recognition in the display space.  Japan Display has eLEAP, Visionox (002387.CH) has VIP (Visionox Intelligent Pixelization), and Applied Materials (AMAT) has MAX™ OLED, and we expect major display producers are all running their own development programs along the same lines.  We note also that while the processes do have differences, display manufacturers are quite familiar with photolithography as they produce the TFT backplanes for their displays using similar techniques on lines parallel to their OLED or LCD production lines.

Back to the initial speculation…  There has been speculation that LG Display is considering testing the JDI eLEAP process on one of its less used WOLED production lines to see how it scales.  We expect this could certainly be the case, but we would expect that they have or will do the same with MAX OLED and VIP, if they have not to date.  The risk is low if they are using an existing low utilization open-mask line and should one of the process prove out, building out a new photolithographic line with much of the equipment already in place would give them a way to stay competitive.  If none of the processes work out, they can still continue to produce IT OLED displays on their Gen 6 lines. 
We will save the positives and negatives of OLED photolithographic production for a later note.
All in, from the standpoint of both risk and the financial health of LG Display, it would make sense to try all three photolithographic processes and build out at least a pilot line if one or more prove out.  While there is no guarantee that any of these systems will scale to mass production levels and meet the rigid standards that Apple imposes on its display producers, if one does, it would turn LG Display’s difficulties into what could turn out to be an advantage in the long term in terms of cost and in terms of time to production.  It is certainly not a perfect solution to the competitive threat posed by SDC and BOE, but it does leave LG Display with alternatives and that is a major plus. 

​LG Display (LPL) has gone from a company mired in financial issues to one ready to expand and compete.  With the sale of the company’s Guangzhou, China Gen 8.5 LCD fab, and the recent advanced payoff of a short-term loan from parent LG Electronics (066570.KS), the company has now made two substantial spending commitments over the last few weeks, although with few details.
The first was a 700b won ($442.8m US) equipment spending plan for the company’s Paju, South Korea production campus, which we believe was made in response to a number of clarification queries from the Korean stock exchange fostered by investor rumors.  While OLED was specified, which was not a surprise, there were no specific details given as to the technologies or production focus other than roughly half will be spent on front-end processes and half on back-end.  It was noted in the press that the company had plans to sign an MOU with the Gyeonggi provincial government and the local Paju City government that would give the company subsidies and tax reductions (up to 50 billion won or $31.6m US) as a benefit for eliminating overseas production and relocating it back to South Korea.
Here's what the company said:
We are reorganizing our portfolio to focus on OLED, which can secure profitability and enable technological differentiation, and are promoting the advancement of our business structure. We are reviewing various measures to continuously expand management performance and strengthen mid- to long-term business competitiveness, but there are no specific confirmed matters or decisions regarding the investments reported in the media as of now.
Yesterday the board authorized what seems to be another spending plan, this one for 1.26 trillion won ($797m US), or 15.6% of the company’s equity capital between today and the end of June in 2027, although dates are subject to change.  Here’s what they said yesterday:
We are securing future technology competitiveness through timely preparation for new OLED technologies and infrastructure investment.  Detailed matters necessary for the execution of this investment have been delegated to the company’s CEO.
We do not know yet whether these two investments are concurrent or independent of each other and certainly were given no hint as to the spending direction, although we suspect that the 700b won earlier announcement is part of the larger sum.  However, there are a number of OLED technology points that might be considered.  LG Display has been producing tandem (dual OLED stack) displays commercially since 2019, and while they have not mentioned plans for a dedicated IT OLED fab that would be producing such panels, as has Samsung Display (pvt) and BOE (200725.CH), they have been able to directly compete with South Korean rival Samsung Display, who started commercial dual-stack OLED display production in 2022 and has been trying to catch up to LGD.  While the idea of a more efficient Gen 8.6 OLED for IT fab is a sound one, LG Display seems able to meet Apple’s (AAPL) quality and volume demands on its current Gen 6 OLED lines, and the risk comparison of building out add-on Gen 6 OLED small panel capacity is less than a commitment to a new Gen 8.6 OLED fab.  Given LG Display’s recent financial issues, we would expect them to take the safer path.
Micro-OLED is another potential source of spending, especially in anticipation of a lower cost XR device to compete with Meta’s (FB) Ray-Ban and similar AR offerings.  A bit more risky than OLED for IT, but a smaller capital commitment.  Last on the spending list would be an increase in large panel OLED production.  While growing, the OLED TV space has faced considerable competition from Mini-LED/QD TV sets and also faces competition from Samsung Display’s QD/OLED TV category, but an additional line that can produce both large panel WOLED TV panels and some smaller WOLED monitor panels might still be considered. 
It seems the LG Display board has put the specifics in the hands of the company’s current CEO Chuldong Jeong, who has been the CEO for a bit over one year and is credited with turning the company back into a profitable entity.  Now that the capital has been approved, it will be up to him to decide how to allocate, and likely will determine the company’s future for the next 5 or 6 years.  He makes ~$1m US in salary and receives no bonus or options (at this time).  Lots of pressure for not so much compensation…