Mini-LED backlights are a step up from typical edge-lit, un-zoned Direct, or even FALD (Full Array Local Dimming) LED backlight, and their use in what are mostly high-end display devices allows existing LCD infrastructure to compete more effectively with self-emitting technologies such as OLED and Micro-LED.  Many LCD displays, particularly lower tier models utilize edge-lit backlighting, which places LEDs at intervals across the top and bottom of the display. As the incoming image is scanned, the brightness of these LEDs can be adjusted to match light and dark areas on the image, adding to the display’s contrast, but it should be noted that given the spacing between the LEDs, the light and dark areas of the image do not always match the location of the LEDs, which can cause light from a nearby LED to ‘bleed’ into a dark areas of the image causing halos or similar artifacts.  

By placing smaller LEDs in an array consisting of strings of LEDs, the ability of the backlight to match light and dark image areas is increased however since the strings operate as one, there is still considerable bleed when the image has light and dark areas close together.   LCD designers took this one step further with FALD, which added more LEDs and broke them down into smaller strings called zones.  As these zones were smaller the granularity of the backlight increased, but when compared to self-emitting displays, such as OLED, where there are almost 8.3m pixels, even FALD backlight systems were unable to generate a comparable contrast.

Mini-LED backlight systems take the process to the next level, shrinking the LEDs once again and mounting them on a PCB or glass substrate, and with LEDs this small they can be grouped into smaller strings (or cubes) and the number of zones can be increased to the thousands.  While this is still not a match for self-emitting displays, it does sustain LCD technology infrastructure for a longer period, which aside from improving quality, is the goal of LCD panel producers, especially when that LCD capacity is fully depreciated.
So logic holds that both LCD display manufacturers and LED producers would be interested in developing the necessary infrastructure to produce Mini-LED backlight solutions, and to make Mini-LED technology even more attractive, it does not require new process manufacturing, but there are some issues that have to be solved and the most important is cost.  Given that there are more LEDs in Mini-LED backlights than in existing display backlight types, and that handling progressively smaller LEDs is more challenging, we find that currently Mini-LED backlights are typically used for high-end TVs or smaller displays that are oriented toward video production or graphics where color and contrast are influential factors. 
It takes a bit more expertise and more specialized equipment to produce Mini-LED backlight arrays and given the early stage of adoption, it becomes a typical consumer electronics chicken & egg scenario where the high cost limits adoption and the limited adoption holds back new capacity, but in this case that does not seem to be the way things are progressing.  While adoption is still relatively low for Mini-LED backlights, there have been a number of LED manufacturers that have begun Mini-LED production and even more that have announced plans or are building dedicated Mini-LED capacity, particularly in China.
Announcements from Sanan (600703.CH), Qianzho Optoelectronics (300102.CH), HC Semitek (300323.CH), Jucan Optoelectronics (300708.CH), Shenzhen Ruifeng Optoelectronics (300241.CH), Nationstar Optoelectronics (002449.CH) and Jufei Optoelectronics (300303.CH), just to name a few, concerning projects to expand or initiate Mini-LED capacity have been made over that last few months and while much of this new capacity will not be viable until 2023, there are already concerns that the Mini-LED industry will be facing over-capacity relatively quickly, despite the fact that Mini-LED backlights are currently in short supply.
Questions remain as to whether Mini-LED production will repeat the last LED cycle where excess capacity drove intense price competition that spurred the elimination of a number of smaller LED manufacturers and the need for government subsidies to keep a number of larger Chinese LED manufacturer afloat.  The good news is that while Mini-LED based displays are expensive currently, we expect that to change relatively quickly, which will increase adoption by CE brands and improve the overall quality of displays, while preserving the trillions of dollars’ worth of LCD infrastructure that has been made over the last 18 to 20 years.  While price wars and over-capacity are not good for producers, consumers are the beneficiaries. 

​Back on 10-01-21 we noted that China’s largest LED producer Sanan (600703.CH) was raising capital through a non-public offering to finance a Mini/Micro-LED project in Hubei Province, which was expected to also see subsidies from the local government.  While the project was said to be situated in Ezhou Gedian Development Zone, where a number of Chinese semiconductor and panel producers have existing facilities, few details were given about the project itself, other than 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, little else was known.
Now it seems that Sanan will invest ~$1.24b to build the facility, which will have production capacity for 1.61m GaN (blue/green) wafers and .75m GaAs (red) wafers, and 84,000 4K mini-LED units.  Sanan is a supplier to a number of CE brands that are building out Mini-LED display product lines, including Samsung Electronics (005930.KS), TCL (000100.CH), and Apple (AAPL), although they have had issues with mini-LED qualification from Cupertino as we noted on 3/10/22.  While we do not have a completion schedule for the new lines, we expect much will fall into 2023, a year in which Apple is expected to add more mini-LED backlighting to its product lines.

​Longli Technology (300752.CH) has issued a prospectus to raise ~$157.3m in capital to invest in adding to the company’s Mini-LED production capabilities.   The company raised ~$28.3m back in 2020 to build out 6 Mini-LED production lines for displays, 10 lines for automotive displays, and one for wearables, so the additional capital will expand production exponentially.  While we are not sure where the estimates are coming from, the company expects to produce profits of -.46m yuan $-7.3m US) in 2021 (reported?), 2.47m yuan ($388k US) this year, and 390m yuan ($61.4m US) in 2023.  Obviously someone (likely the broker doing the deal) has set a valuation of 45x the 2022 estimate, which would yield a market value of 11b yuan or $1.73b US).  If only it were that easy…

​Last week we noted that Epistar (3714.TT) was expanding its Mini-LED capacity in both Taiwan and China with plans to increase capacity by ~25% from 1.2m 4” equivalents to 1.5m, lower than original expectations of a ~50% increase across both regions.  The company has now indicated that the China production lines will have a capacity (new) of 300,000 4” equivalents, which would absorb all of the new capacity we noted.  Given that we expect a capacity increase in Taiwan also, we expect the expansion plans are now for greater than 25% capacity expansion by the end of this year.  While not all of this capacity will be on line at the onset, Chinese capacity will start operation in 2Q.
While a number of Chinese LED producers are working toward Mini-LED mass production, most are still in trials with Mainland panel producers and in small quantity production mode.  China’s largest LED producer Sanan (600703.CH) has been in such trials but will likely not move into volume production until 3Q or 4Q of this year at the earliest, leaving Epistar the first mover advantage in China.    China’s largest panel producer BOE (200725.CH) has been developing glass based mini-LED backlighting products for both large TVs (75”) and monitors, and is said to be in mass production, but given the specific nature of the backlight (75” 8K) and the rigid characteristics, we expect it is more of a low volume product.  

​Mini-LED backlights give longevity to LCD displays in that they allow LCD technology to better compete with OLED displays.  While Mini-LED technology is an outgrowth of conventional LED backlight technology, by making LEDs smaller and squeezing more into a display, the contrast of an LCD display can be improved while reducing fast motion artifacts (smear or trails) and halos.  Given the vast investments made in LCD production capacity over the last 15+ years, any technology that can extend the life of those assets is one championed by panel producers.  From a CE brand perspective the higher price of OLED displays on a m2 basis, keeps some mid-to lower price point products out of the OLED display sphere and focused on less expensive LCD display panels, but at the same time those products must compete with OLED and other emerging display technologies to stay relevant. 
Mini-LED backlights do just that by improving LCD display specifications, especially when paired with quantum dots, so aside from the enthusiasm for Mini-LEDs from LED producers, brand interest in Mini-LEDs is increasing as the supply chain for Mini-LED components and modules expands.  LED producers are happy to see a path toward a more upscale market, especially as generic LED production processes are relatively easily scaled to Mini-LEDs, and brands see this as another level of differentiation and premium pricing.  Samsung Electronics (005930.KS), LG Electronics (066570.KS), TCL (000100.CH), Sony (SNE), and Hisense (600060.CH) have all adopted the technology for their TV lines, and Apple (AAPL) has been using Mini-LEDs for a number of products, from the Apple Watch to the MacBook line and in the company’s XDR Monitor.
It is not secret that Apple has been working with a number of partners toward the continuing development of Mini-LED technology, but also with a bent toward developing Micro-LED displays, which are both a major step forward in display technology and one that would eventually compete with OLED and even LCD itself.  That said, Apple continues to work with partner Epistar (3714.TT) toward further development of Mini-LEDs and is supplied by Epistar, OSRAM (AMS.SW) and Sanan (600703.CH) from their products.  Sanan seems to have had some issues (IP) that have made product qualification more difficult, however Epistar has been both a development partner and LED supplier to Apple for a number of years.
To that end, Epistar is expanding its Mini-LED capacity in Taiwan and China, although speculation on the extent of that expansion seems to be somewhat unreliable. Late last year expectations were that Epistar would be expanding capacity by 50% in 2022, and while that seemed a bit optimistic, we noted last year that Epistar was seeing strong demand starting in 2Q, roughly the same time Apple was beginning volume production for the MacBook Pro.  The company did add Mini-LED production capacity late last year, so some of the 50% increase expected for this year might have been pulled forward, but we note that Epistar is at least going forward with capacity expansion plans this year of 25%, from ~15m in2 to ~18.8m in2, or 1.2m 4” equivalents to 1.5m. 
While it cannot be assumed that all of the new Epistar capacity will be allocated to Apple, we expect they have communicated longer-term plans and Epistar has responded.  All in, the expansion likely signals Apple’s continuing ‘investment’ in Mini-LED technology and the potential for new Mini-LED products, and solidifies some of the speculation as to additional products either this year or next.  While this says nothing as to Apple’s feel toward other display technologies, as each product category has its particular needs and specifications, it does give the Mini-LED supply chain a ‘warm’ feeling knowing that Apple, Samsung, LG, and TCL are all expanding the use of Mini-LEDs, and while suppliers are more will to take capacity risk, Epistar’s expansion seems to point the Mini-LED industry in the right direction.

Samsung Electronics (005930.KS) has revealed pricing on some of its 2022 Mini-LED/QD TVs.  While these prices might vary between countries, the prices we have seen are for the US.  While we have tracked Samsung’s Mini-LED/QD line pricing throughout the year and noted an overall decline of 27% across the line yesterday, we were surprised that pricing for most of the 2022 Mini-LED/QD models are the same as last year’s initial pricing, having hoped that Samsung realized that perhaps 2022 might be a year when they lowered initial pricing to be more competitive.  There are some mitigating circumstances, such as the continuing component shortages, however LCD TV panel prices have declined significantly since last year and we would expect the cost of Mini-LED backlights to also have declined as capacity expands.
Obviously our view differs from that of Samsung, who is likely more concerned that the Mini-LED/QD line is well-positioned and will not interfere with sales of its other TV products and less concerned with developing the Mini-LED/QD market.  That said, if the starting point for the new line is the same as last year, we would expect the discounting that we have seen for the 2021 models to be repeated with this year’s models.  While we need to fill in a few more gaps for 2022 model pricing and expect new size categories for some models, the pricing trend for Samsung’s Mini-LED/QD line looks to be about the same as last year.

​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.
 
 
 
 

​While we still have some time before Samsung’s (005930.KS) 2022 Mini-LED/Quantum Dot TVs actually become available, we checked in again to see if the pricing of the 2021 models has changed for President’s Day, a state holiday (formerly known as Washington’s Birthday) that is observed in only 38[1] of the states in the US on the 3rd Monday in February.   The results were mixed, with 40.0% of TV prices in the 35 we track increasing, 14.3% decreasing, and 45.7% remaining the same. There was almost no rhyme or reason to those changes, although that leads us to believe they are likely inventory related, but the only identifiable pattern being the price increases on almost all of the low-end quantum dot models, which saw some aggressive discounting during the Super Bowl.  Other than that President’s Day does not seem to be a time to take advantage of TV discounts, at least not this year.


[1] Not Observed in: Delaware, Florida, Iowa, Kansas, Kentucky, Louisiana, North Carolina, Rhode Island, or Wisconsin.  Georgia & Indiana celebrate Washington’s Birthday on December 24th and New Mexico celebrates President’s Day on the Friday after Thanksgiving.

​With Super Bowl LV! Coming this Sunday, we thought it might be a good time to check on TV prices, given the “Deals, deals. Deals…” type advertising that is being promoted on just about every possible media type.  Since we have detailed historical data for Samsung Electronics (005930.KS) Mini-LED/QD TV line (2021 only as 2022 sets have been announced but not priced of released) we updated that data to see if the deals being offered for the Super Bowl are as good as some of the advertisements proclaim.
As we have previously noted there are 35 TV set models in the group we have been following, consisting of 6 8K Mini-LED/QD TVs, 11 Mini-LED/QD 4K TVs, and 18 QD only 4K TVs.  Pricing was released on May 20, 2021 and we have collected data 21 times since then, with the last being yesterday.  While two models were at their highest price, the $15,000 98” (QN98QN90AFXZA), a set that has not changed price since its initial release, and the least expensive QD only 32” model, which currently sells for $500 and has for most of its life, but dropped to $400 during the period around Black Friday.  Aside from those two, 22 of the 35 models are at their lowest price since release, although only 5 of those are lower than any previous low price, including those reached during the holidays, so while the discounting seen for the Super Bowl has brought many models down to their lowest prices, only 5 of those are lower than at any point in the model’s history.
We do note that the current discounts seen for Samsung’s 2021 Mini-LED/QD line are considerable against the previous pricing (1/18/22) in some cases, ranging from a low of 0.0% to a high of -26.7%, most have been seeing increases after the November/December holiday period, so while those discounts look good on a percentage and dollar basis, most are back to the same spot seen during the holidays.  We also note that Samsung has announced their new 2022 line, although pricing and release dates have not been set, so there is some incentive for discounting to move older inventory to make way for the new line.  All in, while not the perfect time to buy a TV set (ideally, the period around Black Friday), prices are certainly better than they have been for the last few months, down an average of 25.8% across the line, against original pricing and the biggest single period drop (-8.0%) (period/period) during any pricing period, including the 7.1% drop seen October 20, which began the holiday discounting.  Of course, the last two pricing periods saw increases of 4.9% and 4.2%, so in most cases prices are just back to their previous lows, but the data says its not a bad time to be buying a TV, especially a relatively high end TV as long as it doesn’t cut too deeply into the chips and dip budget.