​Two days ago WG Technology (603773.CH), aka Vogel Optoelectronics made the announcement that it would be forming a new company, Jiangxi Dehong Display Technology Company (pvt) for the purpose of building 60,000 meters of production space and 60,000 meters of warehouse space in which it will produce glass substrates for Mini-LED and Micro-LED displays.  The project, which is expected to take ~24 months to complete and will cost ~$261m US will be capable of producing ~437,000 m2/month or roughly 550,000 55” equivalent displays.  As we have previously noted, the increase in pixel density in Mini-LED and eventually Micro-LED displays causes a number of problems, including heat buildup and increased circuit resistance.  In order to combat these issues, backlight designers have begun using glass rather than PCBs and placing the circuitry using thin-film processes and direct LED connection, which would help to validate the project that WGT is building.
That said, the company, which has been around since 2009, seems to have had some missteps over the last few years and we wonder why (more, ‘how’) they are spending money to build this new glass capacity.  At the end of 2Q last year the company noted a 49.1% increase in sales but a 65.7% increase in receivables, which doesn’t include additional receivables of 13.45m yuan, which would put receivables almost at the 1H sales number.  Since the company was listed in 2018 sales have increased but net profits have declined, with the company’s explanation of ‘competition in  the display industry’ as the reason for the poor performance in 2018 and 2019, and the expansion of R&D and ‘other factors’ as the reason for the poor performance in 2020.  In the 2021 1H report they stopped giving a reason for the continuing decline in profits.
The company’s stated goal has been to purchase OLED display panels from local suppliers, create modules, and sell them to buyers outside of China, however it turns out that their largest customer, a Chinese lighting company, is over 80% of sales so the company, which still insists it’s a ‘sellers market’ (despite the poor profits), has been looking for new products.  Unfortunately during the ‘transformation period’ as the company calls the last few years, the CFO, the general manager, and the secretary of the board all resigned, after the company made three acquisitions with one still in litigation.  We are sure that the company will likely get a bit of help with this new financing, but we wonder from who, unless it’s the local government looking to create jobs and another few years before the company stops justifying losses.
 
 
 
 

​Over the last few years we have mentioned PlayNitride (pvt) a Taiwan based company that has been developing Micro-LED display technology.  The company, among whose investors are Samsung, Lite-On (2301.TT), Applied Materials (AMAT), and AU Optronics (2409.TT), is expected to submit documents to the Taiwan Innovation Board, a subset of the Taiwan Stock Exchange that is designed to help small companies or start-ups obtain capital.  Among the listing requirements for the Innovation Board are undergoing pre-listing advisory guidance with an underwriter or registration as an emerging stock for 6 months and in business for two years or more.  Sales must be NT$150m or greater ($5.4m US) and the board must have 5 or more members, and the company and major shareholders are subject to lock-up for 6 months after the listing and can only sell an additional 25% of holdings every 6 months after that initial sale.
PlayNitride has developed, both internally and with partners, a number of Micro-LED display products, under the names PixeLED®, µ-PixeLED™, and PixeLED Matrix™, and has been showing prototypes, particularly those used for AR/VR applications and automotive HUD displays for a number of years at major trade shows.  We believe the company is part of Apple’s well-known ‘secret’ LED R&D center in Taiwan, along with AUO and Ennostar (3714.TT) that is researching micro-LED display technology for Apple.  PlayNitride has an R&D and pilot production line in Hsinchu and its building a second line for full scale production.  While PlayNitride is fabless, it has developed a proprietary wafer process, mass transfer technology (stamp), and LED repair process, all of which will help to move the technology into a production mode.  PlayNitride showcased a 37” modular display, a 7.6” transparent Micro-LED display, a 1.4” circular high-density (338 ppi) wearable Micro-LED display, and a 0.39” full color ultra-high resolution (1411ppi) Micro-LED display for AR applications at CES this year.  The listing is expected to be achieved by the end of 2022.
 

​If you are one of those folks that ‘have to have the latest technology’, it must have been a difficult time when Samsung Electronics (055730.KS) released their first ‘consumer’ micro-LED TV in March of last year.  The massive 110” 4K TV was a scaled down version of the company’s “The Wall” a commercial product that was built from modules that could be configured into a screen that was 292” (diagonal), which is 11’ 5” high and 21’ 3” wide.  Last year’s 110” micro-LED TV was a bit pricey, offered at ~$155,000 initially, or ~$30/in2 but Samsung is in the price reduction mode for its micro-LED TV, and has not only cut the price to a mere $83,000 (reportedly) or $16.04/in2.  How might one resist such a bargain?  Well Samsung is now also offering (likely available in June or July) a 114” version for $100,000, or $18/in2 or for those smaller homes, an 89” version for a paltry $80,000 or $23.64/in2, although neither is quite as good a bargain as the 110” model on a value/in2 basis.
But the good folks at Samsung are not really trying to rip off consumers with such high prices as the cost of producing these sets is quite high, particularly the cost of producing the micro-LEDs that make up the light-emitting portion of the device.  To begin with there are 8,294,400 pixels for each 4K screen, which are made up of three (RGB) sub-pixels, for a total of 24,883,200 micro-LEDs per display, and as these chips are less than 100um each, even in such large TVs, they are each smaller than a human hair, which makes the requirements for their production quite complex, requiring a clean room and precise control over the LED growth process.  Even under these rigorous conditions there can be considerable variances in micro-LED chip performance, both from a brightness and a color standpoint, and measuring these characteristics on a wafer containing hundreds of thousands of micro-LED die.  Since the measurement of those characteristics is a developing science, not all ‘bad’ die are always identified, so when they are transferred to the substrate of the final display, some need to be replaced, a process that is even more difficult than the transfer process itself.
Given that as the micro-LED TV size decreases, such as in the 89” version, the micro-LEDs either need to be smaller or they need to be packed more closely together, both of which increase the difficulty and cost of producing these smaller sets, and this is likely why Samsung has temporarily abandon plans to release sets below 80” for the near-term, and given estimates that Samsung has sold only a few hundred of these sets makes it more of a science project than a real retail product.  That said, we are back to the consumer electronics ‘chicken and egg’ concept that keeps companies operating under the belief that if they can come up with a new technology, despite its high cost in the early days, consumers will find some value and will begin to justify the kind of process improvements and mass production that are necessary to bring down the cost.  But this is not a rapid process, which is evidenced by the January 2006 release of the BenQ/Siemens (2352.TT) S88, the first smartphone to use an AMOLED display as its main screen (2”), with OLED smartphones now 16 years later taking up over half of all smartphones produced.
So while we are certainly optimistic that over time micro-LEDs will improve in quality and cost, we are not expecting a competitive micro-LED TV product in the near future.  There have already been significant improvements in micro-LED process technology and there is certainly a path toward mass production, especially when used in conjunction with quantum dots, but right now such sets are a novelty that TV brands use to prove that they have the technology to lead the market, so be patient and remember, due to the magic of compounding, with an initial investment of $100 and putting away $10 per month, after 16 years you will have earned an extra $1.44 at today’s 0.06% average bank saving account interest rate, so start putting that money away now!

​Samsung Electronics (005930.KS) has been a proponent of the embryonic Micro-LED TV market, introducing a retail TV line (The Wall) this year to augment the commercial Micro-LED signage product it sells directly to business customers.  While the commercial product is based on modules, allowing the configuration to be determined by the customer, the retail product is produced as a single unit in a number of sizes, although currently available in only the 110” and 99” sizes, which cost ~$155,000 and $147,000 respectively, with the 99” model not yet in production.  Samsung has been producing less than 20 units each month during 2021, against customer orders, but is expected to produce 200 110” units in January to both supply sets for a number of trade shows early in the year, such as CES, Eurotrade, and FPD China, where the company expects to show the sets to consumers and businesses and (hopefully) take orders.
Samsung has been planning to release 101”, 99”, 89”, and 76” models this year but has delayed production until it better understands how the public will respond to these smaller but still expensive TV sets.  Samsung will be switching from PCB board based LED displays to LTPS (Low temperature Poly-Silicon) TFT backplanes produced on a glass substrate for the newer models, which will allow for the LEDs to be more densely packed, a necessity for the smaller TV sizes.  The modules for Samsung’s commercial Micro-LED modules ranges from 1.68mm to 0.84mm between adjacent LEDs.  Given that the same number of pixels (8.29m pixels for 4K resolution) must be fit in to a 76” set that is 48% smaller than the 110” models, the spacing between each pixel must decrease as well, making it difficult to populate a PCB board.  By producing the TFT structure on a glass substrate, in the same way it is done for LCD and OLED displays, and transferring the micro-LEDs to the glass substrate, such densities can be achieved, albeit still at a high cost.  AU Optronics (2409.TT) is expected to be producing the micro-LED backplanes for Samsung.

​Samsung Electronics has asked Samsung Display and AU Optronics to develop a 12.7” TFT module for its micro-LED TVs.  Not to be confused with its Mini-LED TVs, the Micro-LED line, which was originally designed for commercial installations, is built form modules that can be attached to form a seamless display.  With each sub-pixel a single LED, a 4K display will require 24.88m LEDs, all of which need to be powered and controlled by a TFT (Thin-film Transistor) circuit.  Since the distance between the LEDs (pixel pitch) is high enough that Samsung was able to build the TFT on a PCB board, that has been the way the company has been producing modules in the past, however as the pitch gets smaller and the resolution increases, such as in 8K resolution, it becomes difficult to produce the control circuitry using the same TFT technology used for smartphone displays.
The complexity of a TFT circuit using LTPS (Low Temperature Poly-Silicon) on Gen 6 is a 12 mask process and the cost of the equivalent for Samsung’s Micro-LED circuit is considerably more (24 masks).  The 89” model that Samsung is expected to release next year will need 49 12.7” modules, the cost of such ‘TV sets’ will be quite high, high enough that Samsung is expected to cancel plans for smaller models (70”) as the competition from OLED, Quantum Dot, and Mini-LED TVs at that size would make the high cost unmarketable.  At sizes above 80”, the competition falls away, giving some room for the high cost of Samsung’s TFT based Micro-LED TVs to garner some sales.  From a technical perspective moving away from PCB based modules is a positive but it will take lots of unit volume to scale down the cost of the TFT (along with other issues), so we are expecting little from Micro-LED TVs in 2022.

In our note of 9/30/21 entitled “One Small Step for Mini-kind” we noted the progress made by Kulicke & Soffa (KLIC) as the first shipment of their LED transfer tool Luminex™ reduced the time needed to transfer Mini-LED die from wafer to substrate using a laser based system that increased throughput by over 12 times over the company’s previous tool.  This reduces one of the bottlenecks that keeps the cost of Mini-LED backlight products high and will serve to expand the use of Mini-LEDs across a wider swath of display devices.  But the challenge of transferring Mini-LED LED die is miniscule compared to that of transferring Micro-LED die, which can be as small as 5um, with Mini-LEDs in the 100um or greater range. 
Size is an issue for any tool that must move such small devices from one location to another without damage however we also noted that Mini-LED backlights generate light to allow an LCD display stack to generate images while Micro-LEDs are self-emitting, meaning they produce the colored light that would make up an RGB display without a liquid crystal layer and a color filter.  This is a huge difference that puts Micro-LEDs in a class far above LCD technology, however as self-emitters, three LED die (RGB) are needed for each pixel, which means that instead of what might be 10,000 or 20,000 singe color LEDs in a Mini-LED backlight, a 4K Micro-LED display would contain 24,883,200 individual LEDs, increasing the number of potential die transfers by over 1,000 times. 
The die transfer time (moving die from wafer to substrate, even using the faster Luminex™ tool, would increase from 20 seconds (20,000 Mini-LEDs) to 6.9 hours for a 4K micro-LED display, making it infinitely more costly.  But it doesn’t end there, as not only are there more LED die to transfer but as noted above they are much smaller, making the accuracy of placement on the substrate a much bigger challenge for Micro-LEDs than for Mini-LEDs, yet that is not the biggest problem that Micro-LEDs face.  In order to create a Micro-LED pixel, one red, one green, and one blue Micro-LED would be needed. 
Conveniently, blue and green LEDs can be grown on a substrate made of GaN (Gallium Nitride) by creating structures of InGaN (Indium Gallium Nitride) between substrate layers, however red LEDs are produced by using AlGaN (Aluminum Gallium Nitride) between the GaN layers.  This means that red LEDs must be produced on a separate wafer while, in theory, blue and green LEDs can be produced on the same wafer.  If all three structures could be produced on a single wafer, the complexity of transferring such vast numbers of small die could be greatly improved, but as it stands that has not been possible or practical.  Not only do red LEDs cause this problem for Micro-LED developers, but unlike blue and green LEDs that maintain performance and their size decreases, red LED performance degrades rapidly as they are made smaller.  This makes bringing down the size of an RGB pixel to what is necessary for Micro-LED applications problematic, as the performance of the red sub-pixel would be far less than that of the blue and green.
But all is not lost as a small start-up, actually a spin-off from the University of Cambridge, Porotech (pvt), says they have a solution that would allow red LEDs to be created on a GaN substrate using the same InGaN material structures as the blue and green LEDs, meaning all three could theoretically be produced on a single wafer, simplifying the transfer process and improving the characteristics of the red LEDs at the same time.  This is done by changing the structure of the GaN substrate, creating a porous layer in the substrate that greatly improves the material’s optical characteristics while keeping its electrical characteristics unchanged.  The company, which has only been in existence since last year, has raised ~$10m through a number of UK and Austrian VCs and has signed an agreement to work with Chinese micro-display producers Jade Bird (pvt), who will be using the Porotech substrate material to produce Micro-LED AR/VR displays. 
While the technology is still a bit in the early stages, if it holds true that all three Micro-LED structures could be produced on the same wafer with similar characteristics, it would go a long way toward improving the prospects for the commercialization of Micro-LEDs and would eliminate all of the ways in which Micro-LED display designers now currently try to compensate for the technology’s shortcomings.  There will still be many issues that engineers will have to face before Micro-LEDs become a competitive technology but when we see something that seems to be a big step toward putting a new technology on the path to commercialization, we like to make note.

​Sanan (600703.CH) has announced that it will sell shares in a non-public offering to raise capital for a Mini/Micro LED project in Hubei Province.  While the amount of the offering has not been specified, we believe it will be complemented by a subsidy from the local government.  The project is said to composed of an R&D center, a line(s) for Gallium Nitride (blue or green), Gallium Arsenide (red) chips, and a line for packing the LEDs into 4K displays.  The project, will be situated in Ezhou Gedian Development Zone, where a number of Chinese semiconductor and panel producers have existing facilities.  More to come. 

“I’m of the age where we didn’t have television as kids.  So when I saw my nieces and nephews watching Howdy Doody (1947), Kukla Fran and Ollie (1948), and so forth, I thought the world had gone mad” – Jack Nicholson.​

It seems that Mr. Nicholson was right, and with the announcement that LG Electronics (066570.KS) made yesterday, it seems we have delved even further into that madness.  LG announced that it was releasing its first DVLED (Direct View LED) ‘Extreme Home Cinema’ designed for high-end residential installations ‘based on the company’s years of building premium consumer electronics, keen understanding of affluent consumers, and deep expertise as an innovator of DVLED technologies.’  While ‘DVLED’ is LGE’s wording, it seems that this line is really an expansion of LGE’s Micro-LED products, which have been available to commercial rather than residential customers and would compete with a similar product from Samsung Electronics.
The difference between the LG system and the Samsung system  is primarily size, and while both systems are modular and therefore can be custom designed, Samsung’s “The Wall” Micro-LED system taps out at a mere 292 inches (diagonal) while the LG system can be configured to a mind-boggling 325”.  Using a 9:16 aspect ratio, the Samsung system would come to a display size of 9.9’ x 17.6’, or 25,027 in2, while the LG system comes to 13.25’ x 23.6’ or 45,136 in2 or 80.3% larger.  Even the smallest LG DVLED system which is a tiny 81”, can be configured as 2K, 4K, or 8K and even at 8K the LEDs are above 100um in size, which means both systems are not true Micro-LED products, especially as the LEDs can increase in size as the display gets larger, but they are still very expensive to produce, with the 81” 2K model costing ~$70,000 while the top of the line 325” 8K model clocks in at $1.7m, quite a bit for a home TV.
Aside from the promises of ‘exceptional brightness, years of residential lifespan, incredible viewing angles, and very high color gamut’, the organization in LG that is responsible for such systems (you cannot buy them at any store) not only includes installation from an LG field engineer and twice yearly ‘health check’ visits for three years along with a 3 year limited warranty, which LG estimates is worth ~$30,000 all told, but only applies to those not buying one of the 30 pre-configured packages.  LG goes as far as to explain that the high-end nature of the product is such that they do not ship the components in boxes or wood crates but only in LG branded flight cases, and while the Samsung system allows for multi-window viewing, meaning the display can break the display image into 8 segments, each with a different source, the LG system can window up to 20 sources, allowing the owner to watch multiple games at once while still keeping an eye on the baby and the front door.  If the baby wakes up from all the noise, just bring him/her in a put him/her next to a corner of the screen and put that screen segment on “Pete the Cat”!
Of course, the realities of these systems are such that only a rarefied few can afford the luxury of having such an entertainment devices but if even a few such systems are sold, it will continue to incentivize TV set producers to continue the development of Micro-LED technology and the costs will begin to decline.  We have covered many of the issues surrounding the ‘real’ commercialization of Micro-LED technology, and we would sure like to try the new systems, even for just a few days (weeks?), but in the long run we are still happy with the 55” TVs we have that seemed so large a year ago and now seem, well, a bit small….

There are many issues facing the development of Micro-LED displays, with transferring the millions of tiny LEDs from wafers to display substrates.  As there are almost 25m individual LEDs in a 4K micro-LED display and over 99.5m in an 8K Micro-LED display, moving such vast numbers of ultra-small devices presents some unusual challenges.  That said, aside from the huge numbers, the fact that even at .99999% yield, there would be 249 and 996 non-working Micro-LEDs that would have to be individually repaired, a process that we estimate could be as costly as the entire transfer process, and yields are far from 5 9’s currently.  The most recent estimates we have seen indicate that repairing each non-working Micro-LED takes about a second which would imply a 90% yield would generate 9.953m bad die for each display.  At 1 second each to repair, it would take 115.2 days for repair all non-working die!  There are systems that are being developed that can test all of the die that have been transferred and through various means, such as laser ablation, remove and replace the non-performing Micro-LEDs, but there is also another way.
Instead of pulling all of the die from the wafers on which they were produced, by testing the die at the source, a KGD map (Known Good Die) can be generated, which will point out those die that should not be addressed by the transfer tool, reducing the number of non-performing die that need to be reworked.  Notice we said reduce, because the testing and transfer processes themselves can also damage the Micro-LEDs, however pre-testing and creating a die map can reduce the time to transfer and repair substantially.  Electrically testing these tiny LEDs at the wafer level means they have to be connected to a testing probe, and with the size of Micro-LEDs decreasing toward single digit ums, this can be a somewhat destructive process for a small number of the Micro-LEDs under test, which lessens the effectiveness of the pre-transfer process.  Some companies, such as Instrument Systems (4902.JP) and InZiv (pvt) test at the wafer level using optical means, which avoids the probe issues, and can both mark non-performing Micro-LEDs on the KGD map and indicate whether die metrics, such as photoluminescence (which does not need direct die contact) are up to necessary standards.  That said, testing photoluminescence only can miss some metric that can only be tested by direct contact, so while a single test type system is helpful, it does not solve all of the testing and transfer issues.
According to South Korea’s Top Engineering (065130.KS), while testing for both electrical and optical characteristics at the wafer level, they have found a way to test same without direct chip contact, which, if true, would reduce the potential testing damage completely and speed up the entire production process.  The tool, known as TNCEL-W can inspect Micro-LEDs at 50um or less at the wafer stage and while the company has said that they are currently conducting performance tests with domestic and foreign customers they believe they can make a significant impact on the cost of the Micro-LED process.  There is little other information concerning the tool, as it is still in the test mode, but if Top has found a way to do non-destructive optical and electrical testing they could pull in the Micro-LED timeline when the tool goes into commercial production.  There are still many other challenges that have to be resolved in order to make commercial Micro-LED production competitive, but we are always on the look-out for those that say they can make a dent in the Micro-LED ‘punch list’.  If Top has found a way to do what they say, they have made a big step forward in the Micro-LED world.  

​Micro-LEDs are the wave of the future, at least that is what the display industry is promoting, but from a practical standpoint that wave is still a bit offshore.  A recent report by Taiwan based Trendforce indicates that the annual revenue from the production of micro-LED chips for TVs will see a 250% CAGR between 2021 and 2025, reaching $3.4b 4.5 years from now.  With a number of well-entrenched display companies already producing such displays there are those who believe we are on the cusp of a ‘micro-LED revolution’ that will monopolize the display industry and obviate the need for LCD, OLED, quantum dots, and any other form of display technology.  However, before such a revolution takes place there is an enormous amount of technology and process development that needs to take place, which, when examined even or a cursory level, puts those numbers into a more realistic perspective.
As noted, companies like Samsung (005930.KS), LG Electronics (066570.KS), Sony (SNE), and Chinese brand Konka (200016.CH), all have micro-LED ‘product’, along with a few smaller one-off producers, but in most cases that product is sold B2B, with a secondary focus on a ‘;residential’ type product.  The cost for these products is staggering for a number of reasons, the least of which is the number of LEDs that are needed in such retail products, which ranges from 24.89m micro-LEDs for a 4K TV display to 99.53m for an 8K TV display.  As these chips are usually smaller than 100um they are considerably harder to produce and manipulate than typical backlight LEDs and can be as small as red blood cells. 
This presents a number of challenges to those looking to develop realistically priced micro-LED consumer products, especially as there is a necessity for zero defects in such products, quite a challenge when working with that many LEDs and at such small sizes.  Transfer technology is certainly a question, as moving such vast numbers of such small devices falls outside of typical pick and place technology, with a number of transfer processes being researched to bring transfer times to cost effective levels.  But even if that technology is developed and standardized, the inherent defect level, even in the best of micro-LED production and transfer systems would be unacceptable[1].   Each of those defective micro-LEDs would need to be removed and replaced, adding to the time to produce and the cost of such displays.
But that is some of the easy stuff that is already being worked on by both producers and equipment suppliers, while micro-LED producers are trying to find ways to manufacture such small LEDs with uniformity to wavelength (color) and luminance (brightness), which are essential to a retail product.  Having variations in such metrics would make such displays unusable, but that belies a bigger question as to how those metrics are measured as typical equipment used for measuring same does not scale down to the micro-LED level.  That means testing equipment would have to be designed to measure (non-destructively) every micro-LED on a display and some way to compensate for the inevitable variations that would occur must also be designed.
Even the mounting of such small LEDs becomes an issue as typical PCBs do not have the capability for such small connecting points and connection lines.  Even with mini-LEDs, micro-LEDs larger cousins, PCBs are being replaced by processes that deposit the LEDs on a metalized glass substrate, again with new equipment and challenges for mass production.  There are many other issues that face the production and commercialization of micro-LEDs and while we expect the display industry will eventually solve or find workarounds for most or all of such challenges, we find headlines that feature huge CAGRs for Micro-LEDs a bit self-serving.  They probably do help to sell such expensive research reports but they do little to help lay investors to understand the complexities of creating a viable supply chain that can produce Micro-LED products profitably and add to the confusion that some have as to the longevity of existing display modalities.  


[1] For a 4K device with a five 9’s yield, there would be 249 defective micro-LEDs on average.  That would increase to 996 in an 8K display