There are hundreds of smartwatch brands and multiple hundreds of models ranging in price from ~$60 to over $3,500.  Of course there are those diamond encrusted Huawei (pvt) or Apple (AAPL) watches that sell for over $100,000, but the average smartwatch runs between $150 and $300.  These devices typically come with an LCD display, although the display of choice for mid and upper price range smartwatches is an OLED display, with ~70% of high-end watches using OLED, along with 100% of leaders Apple, Samsung (005930.KS), and Google (GOOG) smartwatches.  But there is a new kid in town…
Garmin (GRMN) has become the first smartwatch company to offer a Micro-LED display on a smartwatch with the Garmin Fenix 8 Pro.  To get some idea of how this device compares to other watches we offer the following:

• The Micro-LED display is circular (1.4”) compared to the larger rectangular Apple Watch Ultra 2, a 2023 model that is most comparable.
• The Fenix 8 Pro operates with both iOS and Android while the Ultra 2 is iOS only
• The Fenix has a peak brightness of 4500 nits vs. the 3000 nits for the Apple Ultra 2, and 2000 nits for the Fenix 8 Pro OLED version.
• The Fenix has full two-way satellite communication while the Ultra2 has SOS broadcast only
• The Ultra 2, under normal condition, lasts 36 hours between charges vs. 10 days for the Micro-LED Fenix, but the OLED Fenix 8 Pro lasts up to 27 days.
• The Ultra 2, in ‘always-on’ mode, last 36 hours between charges vs. 15 days for the Micro-LED Fenix, with the OLED Fenix 8 Pro lasting up to 4 days.
• The Apple watch Ultra 2 cost $799 vs. the Fenix 8 Pro Micro-LED, which costs $1,999 and the Fenix 8 Pro OLED which costs $1,299.

So you get a brighter device that should be easier to read in the direct sunlight, albeit with a somewhat smaller display, two-way satellite communication, and a much longer time between charges.  But there is a cost.  The Apple watch Ultra 2 sells for $799 while the Garmin Fenix 8Pro sells for $1,999, and basically the same phone with an OLED display instead of Micro-LED, sells for $1,299.  If we ignore the much higher price against the Apple Ultra 2, there is still a $700 premium between the Fenix 8 Pro Micro-LED and the Fenix 8 Pro OLED version.  Since the devices are almost exactly the same, other than display associated circuitry, that is the difference between the micro-LED cost and the OLED cost (including any premium that Garmin is adding).
When it comes to watches, those willing to spend large amounts are looking for wrist appeal, with lesser emphasis on the type of display.  Micro-LED displays are highly durable and color precise but come at a big cost at this stage in the production cycle.  Hopefully that will change over time, and the technology will become more financially viable for the average consumer, but for now that’s a lot to pay for a brighter display.

Producing displays is a complex task and as the display industry finds new technologies that can push the industry forward, it also must find ways to make those technologies economically feasible or they will never find their way into commercial mass production.  Micro-LEDs are one such technology that shows particular promise as a longer-term display technology, as a self-emitting, high-brightness display modality that can compete on a technical basis with existing LCD and OLED displays that predominate the consumer electronics world.   The problem is however that Micro-LED displays are difficult to produce and in the display space, difficult usually means expensive, and without the ability for display companies to see a pathway toward reducing Micro-LED production costs to a competitive level, they will never develop past the point of being a niche product.
One of the biggest production issues facing Micro-LEDs is numbers.  As in other self-emitting displays, there is a pixel for each ‘point’ on the screen, and at what is now becoming a baseline for displays, 4K resolution requires 8,294,400 pixels per display.  In a large display, such as a TV, the pixels can be placed relatively far apart, but as screen size decreases pixels need to be closer together and while OLED materials can be placed directly on a substrate using metal masks and OVP deposition tools or solution-based processing, LEDs are grown on silicon or sapphire and must be moved from the native wafer to a display substrate.  To make matters worse, each pixel mentioned above, is comprised of three sub-pixels (red, green, and blue), which multiplies the number of pixels showed in the table below by 3.
OLED deposition tools require RGB emitter materials to be deposited separately, which adds to the processing time, while blue and green LEDs can be grown on the same wafer, with red on another wafer.  However, while OLED substrate can be moved through the deposition process, each Micro-LED must be moved from its production wafer to the display substrate.  OLED sub-pixels have size restrictions based on the properties of mask materials but Micro-LEDs can be as small as 2um to 3um, about the size of a red blood cell, which makes them a bit difficult to pickup or move from the wafer to the substrate, so as the display gets smaller, even with the lower resolutions shown toward the bottom of the table, the Micro-LEDs also must get smaller to squeeze them into the smaller space.
We have spent much time over the last few years examining Mini-LED (>100um) and Micro-LED transfer techniques, but we note that while transfer time and cost is certainly a bottleneck in the development of Micro-LED displays, we note that under each sub-pixel there is a TFT (thin-film transistor) circuit that tells the sub-pixel when to go on and off and how bright to be in order to create the millions of color mixes promised by display manufacturers.  This circuitry is produced using typical semiconductor photolithography techniques and in OLED displays the TFT takes up a portion of each subpixel, creating what is called an aperture for the OLED light to escape.  Hence, the larger the sub-pixel, the TFT takes up less space, creating a bigger aperture, and the sub-pixel can be brighter.  However as the display gets smaller, such as in smartphones or AR/VR displays, the TFT remains the same size and the aperture gets smaller and the brightness is reduced.
Micro-LED displays have the same characteristics in that they are self-emitting, but as noted, the complexities of moving over 24m single digit micron sized LEDs with damage can be daunting, but in order for them to work, they have to be moved to a substrate where the TFT circuitry will align with each Micro-LED sub-pixel.  Logic holds that ideally one would want to create the TFT circuitry on the same wafer that the Micro-LEDs are grown on, eliminating the complex and expensive transfer step, but the temperatures needed for TFT creation are near 300°C,which would damage the Micro-LEDs, so the expensive process of transfer and attaching these incredibly small LEDs to a substrate with TFT already present.
According to a Manchester, UK company, SmartKem (SMTK), they have developed inks used to produce TFT circuits that can be processed at ~80°C, low enough that no damage to the Micro-LEDs would occur and allowing the TFTs to be built directly on the Micro-LEDs, without having to transfer them to a separate substrate.  If this process is as successful as the company indicates, it would sidestep the transfer issue and many of the problems associated with their movement, particularly transfer speed and damage, and the company says it can also benefit OLED displays, assumedly allowing for faster total OLED stack creation.  The company claims that the process can be scaled from 10ppi to 2,500ppi, although we believe while the technology has passed the ‘proof of concept’ phase, it will take some time before the commercial scalability can be proven.  That said, if such a technology can be applied toward Micro-LED production it would represent a big step forward to meaningful commercialization of Micro-LED display technology, and while there are still many other bridges to cross before Micro-LEDs can compete against more established display technologies, any process that can eliminate a major commercialization bottleneck is a positive one.

​Sanan Optoelectronics (600703.CH) completed a private equity sale of $1.13b US to be used to increase the capital of the company’s Mini/Micro LED project in Hubei province.  The project has turned profitable according to the company as of September of this year on a net basis and the company feels the expansion is warranted.  The shares were purchased by a number of institutions, some state-owned, and are locked in for 6 months.  The project was originally announced in 2019 with a 3-year construction window and a production goal of one year after construction was completed, although there have been reports that Sanan had been producing production samples in March of this year.
Sanan has signed agreements with Samsung (005930.KS) for the supply of Mini-LEDs, likely being used for watch displays, a JV with Chinastar (pvt) for Mini-Micro-LED R&D, and has been  approved as a supplier to Apple (AAPL), so the company has a legitimate reason for raising capital to expand production, at least from a customer perspective, although Apple has also been working with Epistar (3714.TT) and automotive lighting specialist AMS OSRAM (pvt) for a number of years on various Mini-LED and Micro-LED projects.  We expect the latest capital raise is Sanan’s push to become the dominant volume supplier to Apple, and Apple is certainly one to encourage additional capacity investment from suppliers.
The Mini-LED market is a relatively new one and is still evolving and while we expect the Mini-LED market, which is an adjunct to LCD displays, to grow steadily over the next few years particularly for high-end LCD displays, we see such vast differences in estimates and forecasts for the Mini-LED space (estimates range from $39m to $174m for 2020 and from $81m to $411m for 2021), that it seems a bit problematic when it comes to evaluate such diverse forecasts without knowing what is included.  The same goes for longer-term forecasts, which vary even more greatly out in the 2027 – 2030 timeframe, and the prospects for Micro-LED, which, in theory, would compete with LCD and self-emissive displays, are even more tenuous.  Sanan, already a major LED producer, is among other Chinese LED producers who have been investing is Mini-LED capacity this year, including $717m from Jiangxi Zhaochi Semiconductor (pvt), a similar capacity increase from Xiamen Changelight (300102.CH) and a 289m investment in HC Semitek (300323.CH) by China’s leading LCD display producer BOE (200725.CH), with these firms also looking to become major Mini-LED suppliers as the market develops.

Mini-LEDs and their smaller cousins, Micro-LEDs have been and continue to be touted as the ‘display technology of the future’ and while research into the development and commercialization of these types of displays is still in early stages, every once and a while something comes along that we believe is noteworthy enough to lift itself out of the morass of hype and gobbledygook that surrounds pretty much everything in the highly competitive CE space.  Some of this is technical, but an understanding of the technology is essential to understanding why it has the potential to be a game changer for the Micro-LED industry in particular, although we also want to note that the technology described below is just beginning to be scaled up to commercial levels, and while we believe samples are being evaluated by a number of display manufacturers, there has been no acceptance of the technology on a commercial scale.
That said, the company, Porotech (pvt) seems to have solved two particularly difficult problems that face the use of Micro-LEDs in the commercial display market.  The first is that Micro-LEDs, by their very nature, are small, anywhere from 2um to 100um, or from the approximate width of a DNA molecule to the thickness of a human hair, making them difficult to produce and even more difficult to move without damage.  Given that there are 8.29m pixels in a 4K full color display, with each pixel being comprised of thre (Red, green, and blue) sub-pixels, a single 4K Micro-LED display would entail the production and transfer of 24.88m Micro-LEDs.  The industry has been working toward moving away from typical semiconductor pick-and-place techniques for moving Micro-LEDs from the wafers they are produced on to display substrates, but even the most sophisticated processes take time to move that many Micro-LEDs, which equates to high cost.
One factor that helps the transfer process is that both blue and green LEDs can be produced on  the same wafer, speeding up the transfer process, but red Micro-LEDs are produced using a different material base, which means that whatever process is used to pull blue or green die from a wafer, has to stop and load another wafer with red Micro-LEDs in order to complete the full transfer process.  Additionally, the performance of red Micro-LEDs declines more quickly than blue or green as the size of the LEDs decreases, and the necessity to produce displays with ever smaller pixels is a key part of why the display industry is looking for materials that can exceed the limits of current LCD or OLED technology, allowing the high resolution displays needed for realistic AR/VR and other displays.
P{orotech has come up with a way to allow all three Micro-LEDs to be produced on the same wafer by etching ‘pores’ in the wafer material using a relatively simple electro-chemical process that creates ‘nano-pores’ under the surface of the material on which the Micro-LEDs are produced.  This allows he material to absorb the extra Indium atoms that the red Micro-LEDs normally produce which reduce its performance, giving all three colors roughly the same characteristics without a separate wafer process.  As the production and transfer cost savings of being able to produce all three Micro-LEDs on one wafer is substantial and the cost of the wafer pre-processing (pore creation) is low, the concept solves both the red performance problems and lessens the cost of the Micro-LED production and transfer cycle.
By itself- the ability to form all three Micro-LED colors on the same wafer while still maintaining similar characteristics is an accomplishment, but Porotech has taken their technology further and made the process even more simple.  The company has developed what it calls Dynamic Pixel Tuning, a process by which it is able to change the color of a sub-pixel by changing the driver characteristics.  Therefore, in theory, three ‘generic’ sub-pixels could become red, green, or blue sub-pixels by changing the driving characteristics of each, essentially allowing the entire Micro-LED production wafer to be the same LED, making production far simpler and making the necessity of placing individual red, green, and blue sub-pixels in the correct position unnecessary.
But, while each ‘generic’ sub-pixel can now become a red, green or blue emitter, there is still the necessity to balance the color brightness given how the human eye perceives colors, just as OLED pixel patterns have more green area than red or blue, and the idea of a ‘generic’, simple to produce Micro-LED sub-pixels is key to cost reduction.  It seems that Porotech has discovered that by varying another driver characteristic the brightness of each LED can be controlled, giving the system the ability to generate full color Micro-LED displays using a more easily produced single Micro-LED structure that is able to perform the same functions as three separately produced and transferred Micro-LEDs.
There is a catch, and that is the driver circuitry typically used for Micro-LEDs would have to change and would likely be more complex, but given the single Micro-LED structure being used, and the ability to create Micro-LED displays directly on TFT silicon, would allow for ultra-high resolution AR/VR displays that would be far more expensive to produce using current Micro-LED fabrication methods.  Even in larger applications such as TV, the concept of a single Micro-LED structure that can create any of the three primary colors will go a long way toward lowering the cost of the technology.
While what the technology shown here promises is certainly significant, it actually serves an additional function, and one that typically has a very high cost.  When Micro-LEDs are transferred from production wafers to a final substrate, they must be placed precisely to match up with the driver electronics, with the entire transfer process having to be gentle enough not to damage these very small Micro-LEDs.  When looking at the number of Micro-LEDs that need to be transferred for just one 4K display (24.88m), even a five 9’s system would generate 249 non-working Micro-LED sub-pixels, a number that would render an OLED display unusable.  After the transfer process is completed in a typical Micro-LED system, each sub-pixel is tested and the non-operating sub-pixels must be removed and replaced, a process that is infinitely more expensive than the transfer itself.
There are some who propose placing a 2nd blank sub-pixel next to each active one that can be used if the original pixel is found to be damaged, but that would double the number of red, green, and blue Micro-LEDs that need to be created and transferred into position for each display, also doubling the cost and TACT time.  Given the ‘generic’ characteristics of the Porotech Micro-LED, the cost of such a ‘double’ system would be considerably lower both at the production level and at the transfer level, making it a more viable alternative to the ‘remove and replace’ techniques that are used today.
So, the technology that this little company has developed seems to have solved a number of issues that are plaguing the rapid commercialization of Micro-LEDs, and while the technology is just getting to the pre-scale stage, it seems to have considerable promise as to moving the world of Micro-LEDs along a bit faster than one might have thought.  As with all new technology and processes, there is no guarantee that the Porotech technology can scale or actually be practical enough for move to mass production at a cost that is lower than existing Micro-LED technologies, but at least on the surface, it seems to have considerable promise and is therefore worth a continued look.
Please note we have no connection to Porotech or any of the company’s officers or staff and have not discussed this note with the company or anyone associated with Porotech in any way.  We have not received compensation in regards to this note from the company or any other sponsoring party and have no financial stake in the company or any invested entities.
​

​According to the Taiwan Stock Exchange, shares of Micro-LED producer PlayNitride (6854.TT) began trading today.  PlayNitride is the first company to be trading on the new Taiwan Innovation Board, similar to that of the Chinese Innovation Board that has less onerous requirements than standard trading platforms on those exchanges.  The original deal was for a maximum of 6.305m shares at a maximum price of 138 NT$, and while final trading results are not in quite yet, it seems the deal came at $NT$ 127 and closed 9.9% higher at NT$139.5, after trading 597k shares.  We will note deal value when we have actual shares completed, although preliminary value was ~.5b US$..
The company has posted 3 months of monthly data (May – July), with July sales of NT$37.419m (~1.24m US), up 93% y/y, and full year sales of NT$122m ($4.05m US) in 2020 and NT$205m ($6.8m US) in 2021, with operating income of NT$-792m ($-26.3m US) and NT$-1.24b ($-41.13m US) respectively, with capex in those years of NT$327m ($10.85m US) and NT$232m ($7.7m US).  PlayNitride’s chairman stated that the company is to become (a/the?) major micro-LED chip producer over the next two to three years.  As the first listed pure play in micro-LED PlayNitride will be closely watched. 

Micro-LED technology has been heralded as the eventual basis for a new display industry, citing high brightness, high contrast, and the potential for low cost production, and a number of leading CE companies have taken up the micro-LED flag, promoting the concept and funding component development and process research.  That said, there are a number of significant challenges that must be met before the technology can be applied to consumer devices in a cost-effective manner, and while micro-LED research continues to find point solutions to some of those problems, the segment remains in the R&D stage, despite the few ‘showpiece’ products that appear in the press.
Some of the issues concerning the cost structure of the micro-LED production process have to do with moving the vast number of ultra-small LED structures from a wafer to a substrate, but making that process even more complex is the necessity to evaluate each micro-LEDs characteristics before they are moved, without doing damage.  Once each of the almost 25m micro-LEDs needed for a 4K display have been characterized, which at the least would encompass brightness, color point, and electrical characteristics, after which those die that did not meet minimal standards would be marked as unusable and exempted from the transfer process.  This means that the transfer process, which in most cases needs to be done in groups, would have to be able to skip those micro-LEDs that do not meet standards, making bulk transfers like stamping, considerably more difficult, or more complex at the next stage, where those under=performing micro-LEDs would have to be removed and replaced.
This is just one area that keeps the commercialization of micro-LEDs a less than near-term realization, which makes us doubtful that recent estimates as to the growth of the micro-LED large display market are realistic..  The only factor in favor of such large incremental gains would be the extremely high cost of such devices, rather than high unit volumes, as the sale of units that cost upwards of $75,000 could boost micro-LED industry revenue with relatively few units, however that goes against what is necessary for the industry to grow as unit volume is necessary to support the development of a substantial micro-LED infrastructure.  While we present the data below, we have a less optimistic view of how quickly the micro-LED industry will generate revenue over the next few years, and while we would like to be proven wrong, we take the low road when it comes to the development of new technologies in the display space.  We believe it will happen, but perhaps not as quickly as Trendforce expects.

​While we waxed optimistically about Micro-LED in yesterday’s note we feel obligated to put some of that optimism in perspective.  Leyard (300296.CH), one of the two companies mentioned in reference to the new production level Micro-LED chip that was the basis for our note, has been developing production capabilities toward offering a number of chips and modules with progressively smaller pitch (the space between Micro-LEDs) implying the higher pixel densities needed for AR/VR applications.  That said, the company’s public display business, its primary revenue source, has seen business deteriorate (net profit down between 5% and 9% in 1H) as lockdowns in China reduced tourism traffic and signage demand by ~50%, while the company’s VR related business increased by 14% y/y, although it remains a relatively small part of the company’s net profit.
Leyard did indicate that great progress has been made with the company’s Micro-LED products, as we indicated yesterday, and that the yield rate on Micro-LED mass transfers increased from 98.9% to 99.995%, a substantial increase, but to put that into perspective, if we were to look at the transfer of Micro-LEDs from wafers to substrates for a 4K display, a 98.9% yield would leave 91,238 pixels unusable, while a 99.995% yield would generate 415 bad pixels. If we look at the fact that each pixel is made up of three sub-pixels, those numbers increase to 273,715 bad sub-pixels at 98.9% and 1,244 bas sub-pixels at 99.995%. 
What makes these numbers significant is that these bad pixels/sub-pixels need to be repaired, and that cannot be done using the same mass transfer techniques used to bring large quantities of Micro-LEDs from a wafer to a substrate.  Each bad Micro-LED must be removed and replaced, a far more tedious and expensive process than the initial transfer, so step function improvements in transfer yield are directly related to process cost.  There are techniques that can be used to offset the replacement of bad Micro-LEDs, such as creating non-operating duplicates for each sub-pixels during the initial transfer to act as spares that can be activated if needed, but the cost of same is equally prohibitive, leaving the ultimate goal to reduce the number of defective pixels/sub-pixels to near zero[1].
We are certainly not criticizing Leyard or other Micro-LED manufacturers about yield improvements, which have been significant over the last year, but investors should understand that while a defective segment of a memory IC can be ‘closed’ with the device being sold with lesser specs, in a visual device bad pixels are far more obvious and must be repaired, , keeping comparative costs high until yields approach 6 or 7 nines or other Micro-LED techniques are found.  While Micro-LEDs an interesting and potentially lucrative display technology that will get increasing press coverage over the next few years, it will take some time before it is able to stand as the basis for a consumer oriented display product that is within the affordability of the average consumer.  Progress yes, ready for Prime Time, not quite yet…


[1] A Micro-LED with only 1 bad sub-pixel would have a yield of 99.999996%

Micro-LEDs are a display technology that has the potential to revolutionize the display industry, realizing the goals of ultra-high resolution displays that have the ability to create images that mimic what the human eye can see.  With a 120° x 120° field of view, the human eye would need the equivalent of 576 megapixels[1] to fully capture the details of a scene, and with 8.29 megapixels in a 4K display there is lots of room for improvement with such a display having pixels 0.375mm apart while the human eye equivalent would have pixels 0.0486mm apart for the same 65” screen.  Of course these are theoretical numbers and the human eye does not take in an entire scene all at once, but the idea that higher resolutions lead to more realistic images is one that has driven the display industry since its inception.
Each display technology that has come along since Philo Farnsworth created the first television prototype in the 1920’s has strived toward creating images that give us the impression we are looking at a real scene and not a flat image on a display, with much of that technology trying to squeeze more pixels onto that screen and that means making pixels smaller and squeezing more of them together and that has caused display engineers to look for methods to make pixels and sub-pixels progressively smaller, but along with smaller ‘dots’ comes more precise tools and that leads to both technical and financial complications and solving those issues can take years and billions of dollars and once a solution is found and infrastructure must be built to support the technology.
Micro-LEDs are essential the same as the LEDs seen in lighting applications only much smaller, and by much smaller we mean very much smaller, with sizes down to 2um, and while growing such almost microscopic semiconductors on a silicon wafer is certainly possible, it also creates a number of problems, one of which is transferring those tiny LEDs to a display substrate, which we have noted on a number of occasions, but there are issues that are equally onerous, some of which are due to the fact that each pixel in a micro-LED display is made up of three sub-pixels, one each of red, green, and blue.  Green and blue LEDs are based on InGaN (Indium Gallium Nitride), while red LEDs are based on InGaP (Indium Gallium Phosphide), which means, in theory, that blue and green LEDs can be grown on the same silicon wafers, but red LEDs must be grown on a separate wafer, increasing the complexity of  transferring the LEDs to a display substrate, and to add insult to injury, as red LEDs get smaller they become less efficient and do not match the characteristics of blue and green LEDs, making the creation of a balanced pixel more complex.
One workaround that has become a focus for Micro-LED display engineers is to use only blue LEDs in each pixel and cover the pixels with a sheet containing patterns of red and green quantum dots.  The dots convert the blue light to red and green, while letting the blue light pass through, similar to the way WOLED displays use a color filter to create color by passing white OLED light through a color filter, essentially a sheet of red, green, an blue dots.  That said, color filters remove much of the light, while quantum dots shift colors with relatively little loss.  This helps to maintain a bright display and lessens the need for multiple OLED stacks or other enhancements that reduce the lifetime of OLED materials. 
Again, the practicality of Micro-LEDs is not perfect and while quantum dots are a more efficient way to generate color, they are not perfect and coating a Micro-LED with a thick film of quantum dots leads to a mis-match of the quantum dots to the blue Micro-LEDs, which reduces the efficiency of the conversion.  Figure 2 illustrates how the mis-alignment of the red and green quantum dots in the QD film can reduce the conversion efficiency of the converted light.  However a small company in Branfod, CT, Saphlux (pvt), a spin-off of Yale University, has come up with a solution that seems to have attracted the attention of a number of US and Chinese venture funds and Shenzhen Leyard Opto-Electronics (300296.CH) among the top Chinese A/V technology companies, who has just announced it has begun mass production of the NPQD R1 Micro-LED chip that was jointly developed by both parties.
Saphlux has developed a process that by electro-chemically etching they create what they call ‘micro-pores’ in GaN doped with Silicon, which allows them to reduces the quantum dot thickness layer by 50% and increases the light-conversion efficiency from 20% to 80% and improving wavelength (color) uniformity.  Once the micro-pores are created they pattern red and green quantum dots (leaving spaces for the blue to shine through), which fill the pores.  Due to the internal light scattering inside the nano-pores, the conversion efficiency is greatly improved, with the process using standard photolithography or inkjet printing, keeping costs low and the improvement in wavelength uniformity reduces the issue of ‘binning’ where each LED must be categorized and possibly skipped during transfer in order to create a display with uniform color and brightness.
All in, we see progress across a number of fronts relative to the practical commercialization of micro-LEDs, and while price comparisons to existing display modalities are still years away, over the last two years considerable movement in micro-LED has been seen, with quantum dots a way to both lessen the difficulty of producing RGB micro-LEDs and the complexity of micro-LED transfer.  Some of this push toward commercialization comes from the AR/VR space where there is a very distinct need for high resolution displays, but the attraction of applications in the more traditional CE space, encompassing TV and IT products including mobile devices, and the high unit volumes they generate seems to have lit a fire under Micro-LED R&D and process engineering that has moved things along more quickly than we had imagined.  We are not at a true commercial level yet, but the number of roadblocks is declining and that will encourage more focus on the Micro-LED space going forward.


[1] (Clark, Notes on the Resolution and Other Details of the Human Eye, 2005)

​In our 02/17/22 note we indicated that Taiwan-based PlayNitride (pvt) was expected to apply for listing on the Taiwan Innovation Board, a subset of the Taiwan Stock Exchange that is designed to help small companies or start-ups obtain capital.  With investors such as Samsung, Lite-On (2301.TT), Applied Materials (AMAT), and AU Optronics (2409.TT), the company gets considerable press concerning its focus on Micro-LED and its participation in Apple’s (AAPL) ‘secret’ Mini/Micro-LED lab in Taiwan.  In order to be listed on the Innovation Board a company must have sales of NT$150m ($5.0m US), the bord must have 5 or more members, and the company and major investors are subject to a 25% progressive share sale restriction every 6 months following the initial listing. Since the restrictions also includes 6 months of ‘advisory guidance’ from the underwriters, we would expect the listing in August or September, which is ahead of original expectations of before the end of the year.
At a recent investor conference PlayNitride management indicated that they expect to break even on a monthly basis by the end of 2023 and generate ‘handsom’ operating profit in 2024.  This will be accomplished by reducing production costs for Micro-LED elements by 95% by 2025, based on 2020 production costs.  While PlayNitride produces much of its own production equipment, and has its own 6” production line (1,000 6” units/month), there has been talk that the company might outsource some parts of the Micro-LED production process to reduce investment costs as it scales up production to 1,500 and eventually 3,000 units/ month.  This is particularly relevant as the company admits there are as many as ten different methods used to transfer Micro-LEDs to final substrates, with the decision on which to use based on the requirements of each customer.
PlayNitride has raised ~$52m from corporate investors and VCs, but is expected to issue 6.305m new shares upon listing (price unknown) and will license its 683 patents to outside parties in order to generate additional revenue going forward.  While we have not seen the paperwork concerning the IPO financials yet, the company shows an operating revenue of $1.328m for May of this year and $271,000 for the month last year with a share capital of $57.1m based on the potential success of the IPO.  PlayNitride generates 63% of its revenue from Micro-LED TV applications, 17% from wearables, 12% from automotive displays, and 8% from Ar devices.  It will be interesting to see how the company progresses, particularly given Taiwan’s more detailed reporting requirements, although we expect with the red chip investors the company already has, we expect the IPO will fare well if pricing remains reasonable.

​The concept of Micro-LED TVs is an exciting one, using ultra-small LEDs as emitting devices, especially as LED technology has been in large scale mass production for many years and production techniques are standardized and mature.  That said, moving from LEDs that are currently being used for TV backlights, which are about 1mm (1,000 um) to Mini-LEDs, ~200um, and then to Micro-LEDs (~2um to 20um) carries some production issues that complicate the transition.  LEDs in standard LCD TVs are used as a backlight, which generates the light that is controlled by the liquid crystal (the LC in LCD), which then passes the light to a color filter which creates the individual color dots that make up an LCD display.  In a 4K TV there are 24.883m of these colored dots, all of which need to be illuminated by the LED backlight.
Since there are typically a few hundred LEDs in such backlights, designers came up with a way to dim groups of LEDs to reduce the light leakage across those dots that are supposed to be turned off, although leakage does occur causing what are called halos and other artifacts that reduce contrast.  In order to compensate designers continue to reduce the size of backlight LEDs and add more, to give more precise control over what areas are light and dark at any given moments, with Mini-LEDs and extension of this process, using thousands of LEDs that can be controlled in small groups or individually.  Taking the backlight concept further however means that LEDs must continue to shrink, allowing more LEDs to be packed behind LCD displays, and at a point that becomes some burdensome that display engineers decided to use the LEDs themselves as the light source, rather than liquid crystal, and Micro-LED displays became a concept.
Such displays are targeted to contain the 24m individual Micro-LEDs indicated above, which is the reason for their even smaller size, but there are many current constraints limiting the production of such displays, particularly the large number of very small LEDs that need to be moved from a die to a substrate and the necessity to test and replace any of these very small LEDS before finishing the display.  Currently, most Micro—LED displays are large, which allows for the LEDs to be a bit larger and less densely packed, and gives designers the ability to create Micro-LED modules that can be connected together to form such large displays.  In most cases these modules are based on PCB boards which make them bulky and relatively expensive, but Samsung is trying to reduce at least one cost point issue by moving from PCB backplanes to TFT (Thin-film transistor) based substrates, which are similar to those used in LCD displays currently.  In fact Samsung is working toward using LTPS (Low-temperature Polysilicon) backplane technology, similar to that used in most smartphones.
By shifting away from expensive PCB boards and ‘returning’ to what would be standard LCD production techniques, Samsung (005930.KS) is hoping to further reduce the cost of its Micro-LED TV line starting with an 89” model and moving the technology up to 101” and 114” models, with the 89” model expected to be released sometime this year.  That said, the cost is still expected to be over $75,000, making it more of a one-of-a-kind item than a residential consumer product, but shifting to LTPS will certainly help to move the technology closer to a price that is commercially viable.  Au Optronics (2409.TT) is expected to produce the first LTPS TFT glass substrate iteration, although Samsung itself will likely become its own supplier if there is a necessity for volume production in the future and the Micro-LED chip itself is produced by PlayNitride (see above) for the TFT models, while Sanan (600703.CH) produces the Micro-LED chips for the PCB based models.  There is still a long way to go before Micro-LED can find its way into the competitive display market, but with each step that becomes a bit closer to reality.  Time brings all things to pass – Aeschylus.