​While we have been carefully tracking Samsung Electronics’ (005930.KS) pricing for it line of Mini-LED/QD TVs since their release in May of this year, Samsung had yet to release the ultra-large units that it had been promising, until now.  Samsung is taking pre-orders for a monster 98” Mini-LED/QD TV that will be selling for a mere $11,112 if you apply all of the possible discounts being offered.  This is not the 8K model, which Samsung was touting last year as the precursor to the ‘retail’ sets now being offered, but is a 4K version, albeit at 11 grand, also a far cheaper one than the $65,800 price tag on the original 8K 98” set, but we expect the supply will be somewhat limited and likely will take some time before it becomes available in the US, so start saving those pennies.
Samsung has also lowered the price (again) on its 8K Mini-LED/QD TV set line, with 5 of the 6 offerings now at their lowest prices since inception.  The top-of-the-line 900A series are now selling for $8,500, $5,500, and $4,500 (85”, 75”, 65”) respectively, down 16.7%, 24.3%, and 20.0% from their original prices, and the 800A series 8K Mini-LED/QD TV are now selling for $5,500, $4,000, and $3,000 (85”, 75”, 65”), down 15.4%, 16.7%, and 14.3% respectively, with only the 65” 800 series set above its lowest price point.
If Samsung’s Mini-LED set pricing thus far is any indication, it would likely be worthwhile waiting a bit before purchasing the 98” model as the sets already released are down 17.9% (8K) and down 11.2% (4K) from their original prices.  Logic says if you can hold out for three months, the 98” model should be selling for a mere $9,867, making it the perfect holiday gift for that someone special.  

Samsung Electronics (005930.KS) never ceases to amaze, now adjusting the prices of their latest line of Mini-LED/QD TVs for the eighth time since the line’s release on May 20.  Most of the price changes have been in the highest price tiers, but in this round, they got down to the bottom tier for the first time.  Of the 33 models in the new line that we track, 1 (3%) model is priced higher than original pricing, while 11 (33%) are flat and 21 (63.6%) are down.  22 (66.6%) of the 33 are at their lowest price point while 1 (3%) is at its highest price point.  Among the 8K Mini-LED/QD sets in the Samsung line up, the average decline from original pricing is 13.9%, while in similar 4K Mini-LED/QD sets the decline is 11.2%.  When looking at sets that are only QD (no Mini-LED), the average decline is 6.3%, with high-end QD sets down 9.7% and low-end QD sets down 3.5%.  Across the entire line of Mini-LED/QD and QD only sets, the average price has declined 9.0% from original pricing.
Samsung’s price changes in this new line, which is its first to contain retail level Mini-LED/QD sets, have been unusual, and we have noted previously that we believe Samsung’s initial pricing was more of a test given the lack of comparables (TCL (000100.CH)) was the only other TV brand with Mini-LED TV product and was not available in the US).  Subsequent to Samsung’s release, LG Electronics (066570.KS) also released its line of Mini-LED/QD TVs at comparable or lower prices, pushing Samsung to rethink some of its original price points.  Of course the true motivator in the TV space is moving units and keeping inventory lean at all levels, so the constant price adjustments seem to indicate that Samsung is still searching for pricing that will allow it to meet internal targets.  
At this early point in the Samsung Mini-LED/QD TV set lifecycle we doubt that component pricing has much to do with set pricing, at least at the top end of the line, but the recent price reductions at the bottom of the line, where component price increases would have the greatest effect, are indicative of the general slowdown in TV set sales and the need to attract consumers with lower prices, despite the effect on margins.  We expect that Samsung still has some margin ‘room’ on its Mini-LED/QD sets , but lowering prices on the bottom of the line when costs are rising seems a bit desperate to us.

​Ennostar (3714.TT), the parent company of LED producer Epistar (pvt) and Lextar (pvt), has indicated that Epistar has been at full, utilization concerning its Mini-LED production capacity since May and expects to remain so through the end of the year.  The company is targeting ~30% of its revenue from Mini-LEDs this year and has yet to decide on the implementation of a planned capacity increase dedicated to that product line.  At the same time it has also been indicated upstream that Apple (AAPL) has begun volume production on its new MacBook Pro, which is expected to include a Mini-LED backlight, with a target level of between 600,000 and 800,000 units/month over the next four months.  With Epistar one of the companies developing Micro-Led and Mini-LED technology at Apple’s ‘secret’ factory in Taiwan, it does seem coincidental that Epistar is seeing such strong demand through the end of the year for Mini-LED product.  We can’t make the assumption that Epistar is a/the Mini-LED supplier for the MacBook unless direct evidence is shown, but it seems to walk like a duck.
As an aside, the management of Ennostar responded to reports that tablet producers would be shifting displays from LCD to OLED next year, which would imply lower demand for LED backlight suppliers as OLED displays are self-emissive and therefore do not require backlighting.  The company response was that yield rates for OLED tablet displays were low and would therefore be expensive and thus would only be used for small sized tablets where the yield would be higher.  This would leave the high-end tablet market open to Mini-LED backlighting. 
They cited the opposite for TVs, where OLED panels would remain the choice for high-end large TVs, while Mini-LED backlighting would be used for smaller LCD TVs.  While this sounds a bit self-serving it does make sense at least for the near-term, but as OLED panel producers gain experience in producing IT product panels, those yields will improve and costs will decrease.  Mini-LED costs will also have to decrease to broaden their ability to compete directly with OLED, so the cost comparisons that are being cited today will likely look quite different in a year.  We expect Mini-LED prices will decline a bit faster than IT panel OLED displays but not because of issues with OLED production but because of the limited number of producers as compared to the number of possible Mini-LED suppliers.  There will certainly be some price push from Chinese OLED suppliers who are trying to break Samsung Display’s (pvt) strangle hold on the OLED space, but SDC has the advantage of both experience and a large captive customer.

OK, we admit it, we are a bit obsessed with Samsung Electronics’ (005930.KS) recent release of its first Mini-LED/Quantum Dot TV line.  Its not that we like or dislike the technology or the sets themselves, but we are fascinated with Samsung’s set pricing, which we have been closely tracking since their release in late May.  What makes this interesting is two-fold.  First, Samsung had little or no reference point for pricing such sets as at the time of their release only Chinese brand TCL (000100.CH) had produced commercial TVs using this technology and those sets had limited availability on a global basis.  Second, Samsung has been ‘adjusting’ the prices on its Mini-LED/QD TVs and even their QD TVs quite often, some in reaction to the recent release of its own Mini-LED/QD TVs by rival LG Electronics (066570.KS).  We believe Samsung is hunting both to find a price point where consumers will be willing to try the new technology (Mini-LED) or will tolerate some of the price increases that are being built into existing LCD quantum dot TVs as a result of higher panel and component prices.
The data that we have collected suggests that Samsung hit the lowest aggregate price point for their Mini-LED/QD line between June 2 and June 25 and has been maintaining or raising prices on the majority of sets since then.  That said, of the 15 models in the Mini-LED/QD TV line, only two models remain at their original prices, with the remaining 13 models are still lower than their initial prices, despite the recent set price increases.  The average price decline from initial prices for the Mini-LED/QD models is now 10.0%, with the range from 0% to -19.2%.  Among Samsung’s ‘plain’ quantum dot TVs, meaning those with QDs but no Mini-LEDs,  only one of the 18 models in that category has a higher price than at release, while 11 have seen no change.  The average decline is 3.9% for this category.  The table below shows recent price changes and the result relative to original prices.

Late last year we noted that Taiwan based Fittech (6706.TT) had been added to Apple’s (AAPL) supplier list and was expanding their capacity by 3x – 4x, with the expectations that they would complete the expansion early this year.  The company, which provides Mini-LED testing tools indicated in April that it had order visibility through September of this year, and now has noted it has orders for delivery through 1H ’22.  In April FitTech stated that it has received ‘significant’ orders for equipment for probing, testing, and sorting mini-LEDs, which we assumed were from Apple or Apple’s OEMs, which for some of Apple’s expected Mini-LED products are Heesung Electronics (pvt), as the assembler, GIS (6456.TT) as the touch provider, and LG Display (LPL) as the display provider.  While there has been no absolute confirmation of same, much of the talk in the Taiwan trade press seems to indicate that such is the case.
Fittech had indicated that it expected sales of LED sorting, probing, and testing equipment to increase from 20% - 30% of revenue last year to 40% - 50% this year, and is now expecting more than 50% from same, with Mini-LED orders from OEMs at least doubling this year.  While the overall share of LED test, sort, and probe revenue will decrease from almost 80% last year to between 70% and 75% this year as tools for measuring 5G laser and optical functions for 5G and sensing are also growing, monthly revenue through 1H is up 55.9% y/y and set a new company record in 2Q, growing 16.6% q/q and 84.3% y/y.  While we expect not all of the incremental Mini-LED revenue is from Apple, it certainly does not hurt to have become a key equipment supplier to a company at the beginning of a new display modality cycle.
 

On 7/15 we noted that Samsung (005930.KS) was expected to release its first Mini-LED gaming monitor, the Odyssey Neo G9, a curved, 5120x1440 resolution 49” quantum dot enhanced LCD display.  Samsung has confirmed that it will be releasing the device this week, and while it will be available in South Korea ($2,085), it will not be available elsewhere until August 9.  The display will use the same Mini-LEDs and Quantum Dot enhancement that Samsung uses in its Mini-LED TVs, and will have 2,048 dimming zones, giving it a peak brightness of 2,000 nits, although no average brightness, a more realistic figure, was given, and a contrast ratio of 1,000,000:1.  The response time is 240 Hz whilst the 5,120 x 1440 resolution is essentially two Quad HD screens next to each other in a single display.
While a direct comparison against other similar monitors is difficult given the fact that no other monitors we know of are billed as Mini-LED monitors although some have direct backlights with multiple zones.  That said, Samsung’s Mini-LED backlight system gives a higher level of backlight granularity than more typical edge-lit monitors or those with direct lit systems.  The Samsung Mini-LED monitor sets a new level for gaming monitors and while certainly expensive, is a level above others, at least in specs, and should push competing brands to adopt Mini-LED backlights going forward.

Mini-LEDs continue to be a hot topic in the tech press, and while we have been talking about the technology since 2018, just the mention of Mini-LEDs seems to generate enthusiasm the likes of which we have rarely seen, and while mobile retail trading platforms and stock ‘news’ on Instagram (FB) have given us a new level of stock volatility in the US, it pales when compared to Chinese markets, particularly the  relatively new Sci-tech Innovation Board.  1H y/y comparisons are still relatively easy to make given the very weak results from many technology companies in 1Q ’20 and a slow start to a recovery in 2Q, so looking strictly at the comps individual investors might get the impression that we are living in a new ultra-high growth environment.
In China there are many companies associated with the production of LEDs or applications surrounding their use.  Some are large and some are small, and all have different performance characteristics according to their customer base and expertise, yet profit hungry investors seem to see little differentiation, jumping in at even the slightest hint that a company might be associated with mini-LEDs.  Take Longli Technology (300752.CH), a company that produces backlight modules.  The company’s stock dropped from 18.35 RMB to 13.35 RMB after it announced that its 6 month interim earnings would result in a loss as material costs rose and LED prices declined, a relatively typical reaction to a disappointing report, but only days later the stock jumped to 33 RMB and is up over 77% in the past month.
What caused this massive change in sentiment?  The company had mentioned on an interactive board that it had ‘achieved a breakthrough in R&D for Mini-LED automotive backlight technology’ and was delivering ‘partial small batches to customers’.  Even with little detail about the ‘breakthrough’, the idea that the company might have discovered something and could eventually be supplying its customer base, which to their credit encompasses a number of large Chinese panel manufacturers, was enough to add the name to the list of LED ‘concept’ stocks that had been on a tear on Chinese exchanges.  Jufei Optoelectronics (300303.CH) happen to mention that it’s automotive LED business had performed ‘outstandingly’ in the 2nd quarter, and a ‘breakthrough has been achieved among customers’ and the stock is up over 60% thus far this month.
There are many Chinese LED companies that did well in the quarter or 1st half, despite the relatively easy comparisons, but it seems that even the slightest mention of mini-LEDs is enough to instill blind faith into Chinese investors and drive stocks to emotional highs.  Much of what we read on such Chinese boards is very basic in nature and there seems to be only a smattering of understanding among individual investors as to the real prospects for mini-LEDs.  Given that they are public forums, the companies’ responses are carefully worded so as to titillate but reveal little, which seems to only encourage others to speculate further, although conjecture might be a better word.
 con·jec·ture  an opinion or conclusion formed on the basis of incomplete information, an unproven mathematical or scientific theorem, or  the suggestion or reconstruction of a reading of a text not present in the original source.

Since May when Samsung (005930.KS) released much of its Mini-LED/QD TV line, we have tracked model pricing.  This has given us insight into both the initial pricing and how that was received by consumers, and how Samsung has adjusted those prices to both try to stimulate sales and compete with offerings from other brands.  Earlier this month we posted what we thought were Samsung’s last round of price changes, which increased rather than decreased for the first time.  At that point we figured that Samsung had found a sweet spot for the Mini-LED/QD line and that prices would hold at that point at least for a while. 
We were wrong, and it looks like Samsung is still looking for the optimal price point for the line and has returned to reducing prices back to their lowest points, and some with first time discounts.   While this data is particular to Samsung TV pricing in the US, we expect a similar situation in other countries as Samsung searches for the right pricing.  We note that Samsung is now competing with LG Electronics (066570.KS) as we noted in our last update, and has always been competing with TCL (000100.CH), who was the first to offer Mini-TV sets, is on their 3rd iteration, and has been the low price leader in the space.
The pricing data reveals a number of points.

• 21 (63.6%) of the 33 models we track have seen discounts from their original price
• 16 (48.5%) of the 33 models we track are at their pricing low point, which implies 76.2% of those that have received a discount from their original price are at their low point.
• 1 (3.0%) of the 33 models we track is higher than its original price.
• All Mini-LED/QD models have received discounts.
• 11 (73.3%) of the 15 Mini-LED/QD models we track are at their lowest price points
• 5 (83.3%) of the 6 8K Mini-LED/QD models we track are at their lowest price points
• 6 (66.7%) of the 9 4K Mini-LED/QD models we track are at their lowest price points
• The average discount from original prices for the 8K Mini-LED/QD models is 14.3%
• The average discount from original prices for the 4K Mini-LED/QD models is 15.0%
• The average discount for models that are only 4K (no Mini-LED) are as follows:

            High-end  -0.7%
            Mid-price  -1.1%
            Low-price  -0.5%
 

• Among the Mini-LED/QD models discounts by size are as follows:

            85” -18.0%
            75” -14.9%
            65” -13.3%
            55” -14.6%
            50” -6.7%
Based on what we have seen so far, we expect the original Samsung Mini-LED/QD pricing premise was “Let’s start high and see what happens.”   Within a month of what was a relatively limited release in the US, Samsung began to discount selected models every two to three weeks.  While a few models saw price drop earlier this month, many that had been discounted, some a number of times, saw modest price increases.  This led us to the conclusion that Samsung had found a spot where volumes met their expectations and were testing the waters to see if they had any leeway to push Mini-LED/QD set prices up a bit.  We expect that the introduction of LG’s Mini-LED/QD line changed the picture, giving consumer a choice, which in both 8K and 4K Mini-LED/QD models was equal to or lower than Samsung’s models.
 
Logically, Samsung needs to better compete with LG’s offerings and therefore seems to have returned to discounting to find a more competitive level.  Given that the cost of the Mini-LED backlight modules is still a large variable given the relatively low unit volumes, we expect there is  considerable play in Mini-LED/QD set margins, allowing Samsung to continue to adjust pricing.  While we expect retailers are passing weekly sales data to Samsung, along with sales data from its own website, we are surprised that pricing has varied as much as it has, and when compared to Samsung’s recent QD only offerings, which have seen no discounting in most cases, and a single round of small discounts in others, the number of discounts in such a short period of time for the Mini-LED lines seem to indicate that Samsung is still chumming the waters until it gets a bigger bite.    

We have been tracking Samsung’s (005930.KS) new line of Mini-LED/QD TVs closely, with the goal of understanding how accurately Samsung priced the sets when pricing was first announced in May.  As we have noted previously, Samsung began a series of price reductions within a week of the release and has continued that trend, at least until now.  As we also noted, LG Electronics (066570.KS) released pricing on its cadre of Mini-LED/QD sets last week, which we believe gave Samsung a reference point from which to adjust set pricing again.  
In the case of Samsung’s 8K Mini-LED/QD sets, prices have now increased since our last check on 6/25 for all models other than one, the largest (85”) high-end model, which was also the only 8K Mini-LED/QD model that had not seen any price reduction from its initial price.  We would expect that Samsung was holding out as long as possible on the initial price until it had a comparable from LG, which came out at $6,500, 27.8% lower than Samsung’s price.  While Samsung has raised prices on most other 8K/4K Mini-LED sets currently, they dropped the price on the top of the line 8K 85” Mini-LED/QD set by $1,500 to $7,500, but still $1,000 above LG’s equivalent.  The other sets in Samsung’s 8K line, which consists of two 75” and two 65” models, have all seen price increases between 3.4% and 18.2% since our last check.  Whether Samsung is adjusting set price due to higher costs or to narrow the price gap between its 8K and LG’s 8K models is an unanswered question, but the trend has certainly changed.

All but two models in Samsung’s 4K Mini-LED/QD line have also seen price increases, ranging from 3.7% to 23.1% from our last check, which is a bit surprising given that they were equal to or slightly lower than LG’s equivalent 4K sets.  This would indicate that Samsung is taking into consideration the cost of LCD panels, which continues to rise, and is passing on that cost to consumers.  We expect that mini-LED production costs have declined a bit over the last few months but we are still in the relatively early stages of Mini-LED production and competition,, which will keep price pressure on Mini-LED backlight prices going forward.
As we have noted, we were surprised that Samsung priced its 8K and 4K Mini-LED/QD sets as high as they did in May, but lower pricing from LGE seems to have helped to push them toward more reasonable pricing.  That said, a more direct analysis of the Mini-LED/QD line vs. more standard backlight/QD models is needed to determine how much of a premium Samsung has baked into the Mini-LED line.  That said, the series of price reductions that Samsung undertook was likely to pull in as many sold units as possible before the end of the 2nd quarter so the company could use that as a talking point going forward.  We doubt they will give much granularity as to sales of the Mini-LED/QD line in the 2Q conference call, but any detail will help to map out price elasticity of the Mini-LED product.

Yesterday we spent some time describing the potential for Apple (AAPL) to transition its iPad line to OLED displays in 2022 and 2023, and we believe there is a faction at Apple and a number of its suppliers who are pushing to make that transition, particularly as a similar transition from LCD to OLED in the company’s iPhone line has been quite successful.  But that certainly does not rule out other display technologies and as we also noted yesterday the OLED coterie at Apple has a rival crew that is interested in staying with LCD displays but adding Mini-LED backlights to enhance the quality.  While the OLED group seems to be focused on the iPad, the Mini-LED group is focused on the MacBook, and it seems that Apple is putting some muscle behind the Mini-LED faction in the near-term.
Apple has been working on Mini-LED and Micro-LED technology for a few years (they purchased micro-LED developer LuxView (pvt) in 2014) and maintains ‘secret’ R&D/Pilot lines in Taiwan and California, where partners Ennostar (3714.TT), AU Optronics (AUOTY) and others work with Apple’s engineers to push forward the development of Mini-LED and Micro-LED devices.  That said, Apple’s foray into Mini-LED technology for the iPad Pro this year seems to have pushed the company to move further toward commercializing Mini-LED technology, with the possibility that the September/October release of this year’s MacBook Pro will include two Mini-LED based models.
Along with a new, or at least updated processor, the is year’s MacBook Pro is expected to be available with a 14” or 16” Mini-LED LCD display, and to prepare for that release Apple is said to be spending $200m to help its Mini-LED supply chain expand to meet  its needs.  In particular we believe that one of Apple’s suppliers, Taiwan Surface Mounting Technology (6278.TT) is building out 4 new SMT (Surface Mount) lines that will be producing Mini-LED boards for Apple, and while we cannot confirm that Apple is financing this expansion at TSMT’s Dongguan, China plant, it does seem that the lines, which are expected to be able to process 700,000 to 800,000 units/month, will be dedicated to Apple, at least in the near-term. 
Apple is also working toward increasing Mini-LED production at other suppliers in the Mini-LED production chain, some of which have been purchasing tools over the last year, or have had Apple purchase the tools for them.  Zhen Ding Technology (4958.TT) and Tripod (3044.TT) have both expanded PCB board capacity recently in order to meet expected demand from Apple, and we know of other intermediate producers or process tool vendors that have seen incremental purchases from Apple’s Mini-LED supply chain or from Apple itself over the last few quarters, as the Mini-LED iPad Pro registers sales.
However Apple’s financial commitment to Mini-LEDs does not color our opinion about the company’s concurrent move toward OLED for other devices, as both have places in the Apple device eco-system, particularly the timelines for the adoption of both technologies differ.  While OLED is more mature in terms of production process, there are only a few producers who are able to meet Apple’s quality and quantity needs, and while we expect other producers to continue to increase production and quality over the next few years, Apple has moved slowly and methodically into OLED displays.  Mini-LED technology is an outgrowth of more typical LED backlight technology, and while the Mini-LED supply chain infrastructure is still developing and process issues are being addressed, there is no ‘new’ technology or process steps that need to be developed before it can be implemented, which increases its attractiveness in the near-term.  This gives both technology camps reason to expect continued support both financially and from a product perspective going forward.  They might be dueling, but they are both really playing the same song.