​LG Electronics (066570.KS) is expected to introduce a 97” OLED TV at CES in January.  This will be LG’s largest OLED TV size, with the maximum currently an 88” 8K model (OLED88ZXPUA) priced at $30,000, although availability is quite limited and delivery times are between 6 and 8 weeks for most retailers.  Such large OLED TVs are not produced in large quantities, with less than 2% of LG Display’s (LPL) production being for such large panel sizes, however two 98” OLED TV panels can be cut from a Gen 8.5 substrate with substrate efficiency close to 100%, which makes them viable for OLED lines that are not producing MMG product that mixes both large and smaller OLED panels on the same substrate., a slower process.  The price for the 98” TV model remains unknown, but based on the price of smaller sets, it will likely be in the $35,000 to $45,000 range.
LG is not only competing with Samsung’s (005930.KS) Micro-LED TVs, as we noted yesterday, but also with its own micro-LED TV brand, so despite the high price, it is necessary for LG to offer such large size OLED models, which, while certainly expensive compared to smaller OLED TV models, are less expensive than the micro-LED offerings by both vendors.  While few consumers can afford the high price tag, such large OLED TVs can be used in commercial settings where the high contrast and color quality are essential to product presentation.  Save those pennies.

Earlier this month Chinese smartphone brand Oppo (pvt) teased with a few words introducing Oppo’s first flagship foldable smartphone, the Find N, which was in development for 4 years and has morphed through 6 generations.  The phone is expected to be released tonight (Wednesday) in China as part of Oppo’s annual Inno Day.  While the picture (Fig 4) shows little, much of the speculation is that the new foldable will look similar to the Samsung (005930.KS) Z Fold, with Korean media indicating that Samsung Display (pvt) is the producer of the 7.1” folding display, while BOE (200725.CH) is the producer of the 5.45” external display. 
As SDC uses UTG (Ultra-thin glass) rather than polyimide films as a cover for the foldable display, the Find N is the first Chinese foldable to employ UTG, with previous foldables from Huawei (pvt) and Xiaomi (1810.HK) using polyimide.  The Oppo foldable is also the first Chinese company to use an LTPO (Low-temperature poly-silicon) backplane, again a characteristic of SDC’s most recent foldables.  While Chinese panel producers have supplied folding displays to Xiaomi for its previous foldable, it is expected that the upcoming Xiaomi Mi Mix Fold 2 will use an 8” SDC folding display (with UTG) and a Chinastar (pvt) 6.5” external display , while both foldable and external displays were supplied by Chinastar on the previous model.  Vivo (pvt), sister company to Oppo, is also expected to use the SDC foldable and a BOE external display for its foldable in 2022. 
Huawei was thought to also have been considering using SDC’s foldables for its upcoming upgrade to its Mate X2 foldable but seems to have decided to remain with foldable supplier BOE, along with Honor (pvt), a former Huawei brand, who is also expected to use BOE for its foldable next year.  Samsung Display is the share leader (3Q) in the flexible OLED market, with a 62.2% share by our calculations, but does face competition from BOE and LG Display (LPL), although combined they still have only a 28.9% share, but when it comes to foldables, SDC is definitely the leader with a share over 90% this year. 
Samsung’s push to spread foldables into the laptop segment has given them a new market, also one that they dominate, and while the unit volumes for foldable notebooks are still relatively small, the surface area is considerable large than for smartphones..  With parent Samsung Electronics’ foldable volume expected to double in 2022 from 7m to 14m units, and the overall market for foldable expected to double from 9m to between 18m and 19.5m units, we expect SDC to maintain a substantial lead over competitors in the foldable space despite the competition from BOE.  It might be a bit more difficult to maintain such a high share in 2023, as Chinese foldable producers sharpen their production skills, but SDC has been one step ahead since day one and will likely remain so in 2023 and beyond.
 

Estimates for OLED notebook production this year are for between 5.3m and 5.6m units, up from less than 1m last year, growing to ~7.5m in 2022 and 15m in 2023, representing not only explosive unit volume growth but significant demand growth on an m2 basis, one of the reasons behind OLED capacity expansion projects in China.  SDC will likely see it overall share of the flexible OLED market decline on a unit basis, but will likely see its actual share of OLED panels for notebooks on an m2 basis increase in 2022, as it has established relationships with almost all of the notebook brands that offer OLED displays, especially its parent, who is expected to have a 20% share of the OLED notebook market itself this year, second only to Asus (2357.TT).
​

Small panel OLED demand increased display shipments in 3Q by 26.6% (16.5% y/y), with flexible OLED displays driving almost all of the q/q shipment growth.  The biggest increase from the demand side came from Apple (AAPL), who more than doubled its small panel flexible OLED panel purchases in 3Q in preparation for the iPhone 13 rollout, and Samsung Electronics (005930.KS) whose purchases were up 50% q/q.  Chinese brand small panel flexible OLED purchases were mixed, with Huawei (pvt) and Oppo (pvt) declining, and Xiaomi (1810.HK), Vivo (pvt), and Honor (pvt) increasing, albeit at much lower volumes, as shown in Fig. 1 – 3[1].
On the supply side Samsung Display (pvt) saw a 101% q/q increase (+15.7% y/y)  in flexible panels shipped in 3Q while LG Display (LPL) saw a 43.0% increase q/q (+68.5% y/y) as they fed the Apple iPhone supply chain, while BOE (200725.CH) saw an 8.1% q/q increase (+58.4% y/y).  BOE has recently celebrated its official entry into Apple’s iPhone OLED display supply chain, which will likely lead to improving shipments in 4Q.  Samsung Display’s share of the small panel flexible OLED market returned to 62.2%, a more normalized level, after a weak 2Q (47.6% share), although down from last year’s 3Q share of 70.0%, and the combined South Korean suppliers garnered 74.8% of the small panel flexible OLED panel production market, with the remaining 25.2% belonging to combined Chinese small panel flexible OLED suppliers.  When looking at both the rigid and flexible small panel composite, Samsung Display holds a 71.5% share with Chinese suppliers at 21.0% vs. 17.0% in 3Q last year.
On an overall basis, small panel OLED production continues to grow despite weak overall smartphone sales as the overall share of small panel OLED continues to grow across the smartphone market, reaching over 50% in 3Q based on our composite small panel OLED shipment data and our composite smartphone shipment data.  This year the number of mobile devices other than smartphones that are using OLED displays continues to grow, particularly notebooks, and while this will not have a significant impact on unit volume, it will continue to increment area shipments, which set the tone for capacity expansion plans.  There are few OLED suppliers that are not expanding capacity, and while much of these plans are for IT based OLED products, we expect the small panel and large panel OLED markets to become more converged as Gen 6 OLED fabs, usually used for small panel OLED production, are still efficient up to 32” panel sizes, making them viable for many IT products which might be considered ‘large panel’.  All in, OLED growth continues based on share growth in more mature applications and to early stage penetration in new mobile device markets.


[1] Note:  Figs. 1 -3 are all drawn to the same scale to show the lower proportion of rigid OLED displays compared to flexible OLED displays.

We have seen estimates for OLED TV shipments increase this year, increasing from just under 6m units (est. in 2020) to over 6.1m and more recently to 6.5m units, with shipments in 1H more than double last year’s 1H.  There are two reasons for the increase in OLED TV sales this year, the first being LG Display’s (LPL) increased capacity, along with the increased availability of smaller sized (48”) models, which carry a lower price and therefore can increase the overall unit volume.  The second, and most important is the price of OLED TVs, which both in absolute terms and against rival LCD TVs have worked toward increasing overall unit volume.
LG Display continues to increase its OLED TV production efficiency using MMG (Multi-mode glass), a process that allows for the production of multiple size panels on a single sheet of substrate, which can improve substrate usage efficiency by very substantial amounts (see table below). This allows LG Display to reduce OLED panel prices while maintaining margins and allows OLED TV set brands to lower OLED set prices during a period when LCD TV set prices have been rising.  In order to quantify just how much OLED TV prices have moved this year, we looked at all 12 OLED TV models released by LG Electronics (066570.KS) this year and tracked pricing from its initial price through current selling price.  We note that all prices shown are from Amazon (AMZN) and not 3rd party sellers, and excludes a number of LG’s more esoteric OLED products such as its rollable TV.
Of the 12 OLED models, all were at their lowest price points for the year and only one model saw a peak higher than its initial price.  The entire line has seen an average price drop of 27.1% from initial pricing, and a 28.5% from peak pricing.  48” sets saw the biggest decrease, averaging 36.3% from peak, while 83” saw the least, dropping an average of 22.3% from peak, while 55”, 65”, and 77” saw price drops of 26.9%, 30.0%, and 25.7% respectively.  While OLED TVs are still generally more expensive than LCD or quantum dot enhanced LCD TVs, and still fall into the ‘premium TV’ category, they have become far more affordable this year than in the past, especially relative to their biggest competitor, LCD TVs.  We do note that as LCD TV panel prices decline, as they have been doing for the last two months, some of the relative price difference will be eaten away, but given that a considerable amount of high-priced TV panel inventory still exists in production or transport, we expect lower TV prices will take some time to appear in full stead.  In the interim OLED TV will have a good year.

​As we gather more data on 3Q OLED smartphone shipments, we get more of an understanding as to the discrepancies in such data between sources.  While we believe that in the case of LCD panels, where there are many variations, small panel OLED displays are less varied and should therefore be easier to track.  In theory that seems correct given that the distinct difference between rigid OLED and flexible OLED as to substrate should simplify calculations, as long as foldable OLED is included, but we see a much bigger difference between shipment estimates, both in the 3rd quarter and in previous quarters.  Last week we noted our expectations for 3Q small panel shipments, but feel investors would be better served with a range that would allow for some of the differences in estimates that we have found.
Based on that concept we offer slightly modified estimates for 3Q small panel OLED shipments:

• OLED smartphone panel shipments in 3Q – Between 160m and 165m units, which would be up between 23% and 25% q/q and between 14% and 31% y/y.
• Samsung Display (pvt) dominated small panel OLED shipments with between 62% and 64% of flexible panel shipments
• Samsung further dominated shipments for small panel rigid OLED rigid displays with a share between 83% and 86%.
• Apple’s (AAPL) portion of total small panel OLED shipments in 3Q was between 34% and 37%
• Apple’s portion of Samsung Display’s small panel flexible OLED shipments was between 65% and 68%.

Some of the biggest discrepancies between estimates were with 2020 quarterly small panel OLED shipments, where differences ranged between 0.5% and 14.6%, while this year the range was between 1.6% and 8.1%.  We expect the range between estimates for this year will expand a bit further as we access some of the more aggressive estimates from China, so we will continue to work with ranges, especially as smartphone brands adjust their full year smartphone shipment targets, but we expect the estimate differences, on a longer-term basis, to narrow in 2022. 

​We have mentioned the expansion of OLED into notebooks and monitors often over the last year as Samsung Display (pvt) and parent Samsung Electronics (005930.KS) try to stimulate that business into one with dedicated capacity and high volume customers.  Both can see that the growth of OLED in the smartphone business, while robust in terms of units and share, will slow overall as penetration rates reach almost 60% next year and competition continues to increase, particularly from Chinese small panel OLED producers.  While the share for individual Chinese small panel OLED producers is relatively small compared to Samsung, China’s largest LCD producer BOE (200725.CH) has been relentless in pursuing Apple (AAPL) to enter their small panel OLED supply chain, and has recently been given preliminary status, and in the OLED wearables market, primarily watch displays, almost every OLED producer has a few offerings, including a number of producers that are passive matrix OLED display suppliers..
Given that Samsung Display is essentially out of the large panel OLED business currently, the logical extension of their OLED business would be into what would be called medium panel sizes, the home of notebooks, monitors and tablets, otherwise known as IT.  Samsung is the dominant producer in the OLED IT space, and at the distribution level faces competition from China’s Everdisplay (688538.CH) and Japan’s JOLED (pvt) (monitors), and in the tablet space comes up against BOE, Chinastar (pvt) and EDO, but Apple’s adoption of OLED display technology in the Apple Watch in 2016 and its full adoption of OLED across the iPhone line, lead many to believe Apple will continue to push OLED technology further up the product line into the iPad and eventually to the Mac line.  That said, Apple is certainly not one to rush into a technology change and rumors about plans for Apple’s continued display transition to OLED are fraught with delays, technical considerations, and capacity issues, so in the interim Samsung is the leading voice in pushing OLED further into the IT space.
2021 has been a good year for OLED laptops, albeit a good year (thus far) for laptops in general, but there are a number of notable brands, particularly Asus (2357.TT) and Lenovo (992.HK), that have been marketing OLED laptops, and to a lesser degree, with a number of brands offering OLED displays as an option in a number of products.  The biggest issue for OLEDs in laptops is price, although we expect to see a number of models fall below $1,000 before year end, as on a general basis OLED displays are more expensive than LCD displays, particularly for sizes where volumes are relatively low, however that gap has been narrowing as LCD panel prices have been increasing through much of this year.  Samsung is evaluating its expansion plans for medium size OLED panel capacity and could add Gen 6 or Gen 8 dedicated IT capacity that would help to lower the cost of OLED IT panels, with the biggest risk to that scenario being the rate of Apple’s adoption in products larger than smartphones. 
Samsung certainly has been known to build capacity in anticipation of market growth, and can absorb some of that potential capacity itself (expectations are for 6m to 6.5m units this year and 10m in 2022, with 80% going to laptops this year), but Apple is not going to make a large jump until it is assured that its specifications can be met, and that could take time.  LG Display (LPL) is also a supplier of OLED displays for the iPhone and has built out dedicated capacity for Apple in the past, so there is competition for Samsung right from the start, but Samsung’s massive promotion machine seems to have been able to gain traction this year, and we expect will be working at full steam as we get closer to CES 2022.  There are competing LCD technologies, particularly quantum dot films used to enhance LCD displays and potentially Mini-LEDs, but Samsung is a leader in the QD space and can offer a wide variety of IT products that will satisfy almost any user without having to take a singular stance on any one technology.  Sometimes its good to be Samsung when you want something to be noticed.

More on OLED Laptops:
http://scmr-llc.com/blog/oled-laptops
http://scmr-llc.com/blog/notebook-whos-who
http://scmr-llc.com/blog/the-price-of-an-oled-notebook
​

​On 9/29 we noted that Samsung Display seemed to have cancelled an on-going project it had been working on for Apple (AAPL).  The project was to develop a 10.86” OLED iPad display for release in 2022 but a conflict over specifications for the panel were cited by the media as the cause for the cancellation.  Samsung’s typical OLED structure is a single RGB stack, however Apple is convinced that such an arrangement would not produce a bright enough display.  They proposed a double stack structure that is essentially two sets of OLED materials on top of each other, with Apple’s contention that the single stack structure would not be bright enough, a relatively common complaint about OLED displays, and that it would extend the display’s lifetime given the use profile for tablets.
SDC seems to have been convinced that such a product, and the changes it would have to make to its production line, would not be profitable for SDC based on its cost estimates and the expectations for potential panel sales to Apple.  We also noted that 2nd OLED supplier LG Display), would now have the opportunity to explore such development without the pressure that SDC would typically bring, particularly as LG Display has already developed a simplified dual stack structure that would be the basis for the Apple panel development.  It seems that such a project is underway at LG Display, with a target of developing a 12.9” dual stack OLED display using LTPO (Low-temperature polycrystalline oxide), but the likelihood of a 2022 product seems remote considering the early development stage, the complexity of the display, and the capacity available to LG Display. 
Perhaps if LGD is able to meet Apple’s exacting specifications, and calculates that they can profitably produce such a display for Apple for an extended period of time, we might see such a device in 2023 or 2024, but at the same time Apple is also exploring Mini-LED technology, which would likely be a bright and less expensive solution, albeit one that might not meet all of Apple’s criteria for color quality without quantum dots, so in reality the pressure never goes away.  Get cookin’.

Composite Small panel OLED display shipments for 2Q came in 7.9% better than expectations, led by stronger than expected shipments from Visionox (002387.CH) and Tianma (000050.CH).  Expectations for 3Q are for a 16.0% increase in composite shipments, led by a large increase in flexible panel shipments (+53.4% q/q) by Samsung Display (pvt), which is likely based on production for Apple (AAPL) and to a lesser degree at LG Display (LPL) likely for the same customer.  3Q on a y/y basis is expected to be up 16.5%.. 
We note that while Chinese small panel OLED suppliers are certainly gaining share this year, they are expected to lose share in 3Q as production for Apple at South Korean producers dominates the quarter.  While BOE (200725.CH) is producing small quantities of panels for the iPhone, we see only a small (8.1%) increase in volumes in 3Q.  That said, while Chinese small panel OLED volumes are still small, they continue to grow as yields improve and capacity is added, and while Korea still dominates the small panel OLED space, there are 5 small panel Chinese OLED producers, with almost all increasing capacity into 2022.

Relationships in the display business are strange animals and the give and take between customers and producers is a tightrope walk that would give the Wallenda’s pause.  Panel producers must evaluate the cost of modifications to existing lines in light of the volumes and lifetimes of customer projects, and an over or under estimation on either the customer or producer side can result in an extended period of poor profitability.  Apple and Samsung Display (pvt) have such a love/hate relationship, with Apple always looking to broaden its display supplier list, while SDC advances its technology quickly enough to maintain a lead over its competitors and ingratiate itself with Apple.
Apple and SDC have a number of development projects, one of which is to develop a 10.86” OLED iPad for release next year.  However recent information out of Korea has indicated that the project has been cancelled due to a technology conflict between the two.  Samsung’s typical OLED structure is a single RGB stack, while Apple is convinced that such an arrangement would not produce a bright enough display.  They propose a double stack structure that is essentially two sets of OLED materials on top of each other, with Apple’s contention that the single stack structure would not be bright enough, a relatively common complaint about OLED displays, and that it would extend the display’s lifetime given the use profile for tablets.
SDC seems to have been convinced that such a product, and the changes it would have to make to its production line, would not be profitable for SDC based on its cost estimates and the expectations for potential panel sales to Apple.  Further Apple is expecting to produce two different OLED iPads, one with LTPS backplanes and one with LTPO, which would mean that SDC would have to change processes on both the OLED line (single stack to double stack) and on the backplane line where it would have to either dedicate one line to LTPS and one to LTPO or switch during production.  Based on the cost analysis for such a product and the yield SDC has been able to get on the production of 10.86” OLED panels, it looks like the project has been cancelled.
Whether this means that Apple will wait an additional year or two until LG Display (LPL) is able to bring production levels up to meet Apple’s goals is an open question. LG Display uses a two stack structure for its automotive OLED displays but has only low volume capabilities currently.  If LGD is willing to expand capacity for IT panels using a tandem structure, there is the possibility that Apple might see a way to release two OLED iPads in 2023, but LGD has to make the same profitability calculations that SDC has made and while they might be more adept at the tandem OLED structure than SDC, they would have to get some more substantial reassurances (such as expansion financing) from Apple before they go further…

We noted on 7/15/21 in our note “Notebook Who’s Who” and again in our 7/30/21 note “OLED Laptops” that Samsung Display (pvt) was trying to develop further its OLED business by expanding RGB OLED production into notebook size panels at the beginning of this year.  Aside from the fact that Samsung Display is the leader in RGB OLED panel production, they have already established production capabilities for notebook panels, supplying to notebook leaders ASUS (2357.TT), Lenovo (992.HK), Dell (DELL) and parent Samsung Electronics (005930.KS) with two panel sizes (13.3” & 15.6”) while competitors LG Display (LPL), Everdisplay (688538.CH), and JOLED (pvt) are limited to single size panels.  As part of this expansion program, SDC has recently begun production of 14” OLED Notebook panels, which have already been allocated to new laptops from ASUS
The new 14” panels, which have a refresh rate of 90 Hz, are expected to appear in the recently announced Asus Zenbook, which will offer both a 4K and 2.8K option, starting at $1,400.  This is a big step up in price over the Asus Zenbook 13, which offers a 13.3” FHD OLED display option for ~$800, but the 90 Hz. refresh rate is a valuable on to gamers, who are the likely buyers, so we expect the higher price might not be as much of a stumbling block to gamers as it might be to the average consumer.  If there is some resistance to the higher price, the more budget oriented Asus line, the VivoBook, is expected to offer three size optional OLED screens starting at $750 and for those with deeper pockets and a flair for the dramatic can purchase the ZenBook Pro Duo 15 which has two OLED screens for a bit over $3,000.

But wait, there’s more…Asus’s competition is not to be vanquished when it comes to OLED laptops, with competitor Lenovo also announcing a number of OLED notebooks (SDC displays), including the Idea Pad Slim 7 Carbon, due next month that will also sport the SDC 14” OLED display, creating what the company says is the world’s lightest 14” laptop, coming in at just 2.37 lbs., albeit at a lower resolution than the Asus 14” offering, and for the very, very budget conscious, next month Lenovo is also offering the Chromebook Duet 5, an Chrome tablet with a detachable keyboard and an OLED display for only $430, likely the least expensive OLED notebook/tablet, at least for now.
All in, what it comes down to is that Samsung Display seems quite serious about living up to its own hype over laptop OLED displays and is following through on its commitment to expand offerings, and, as we mentioned in our July notes, is considering dedicating OLED capacity specifically for the production of RGB IT devices.  There has been speculation that Samsung Display will either convert existing fab space to Gen 6 OLED production or try to build out a new production facility using new technology that would allow it to produce RGB OLED panels in a Gen 8 environment*. 
The seemingly rapid adoption of this new panel size by primary producers gives more validity to either OLED expansion modality and will ramp up SDC’s ability to further dominate the RGB OLED space.  While much will depend on consumer acceptance of the intrinsic value of OLED over LCD at the notebook level, if nothing else, SDC seems to have stimulated the industry’s interest in larger RGB OLED sizes and unless there is some economic or technical impediment to using OLED in notebooks (which we do not expect), we see this as an open field for OLED expansion.  Expectations for OLED Notebook unit volumes and share are modest, with forecasts for this year between 3m and 4m units, or between 1.1% and 1.4% of total notebook shipments, and while up over 400% vs. the miniscule amounts produced last year, growth in 2022 is estimated to be between 55% and 80%, or between 5.6m and 6.5m units. 
These are paltry numbers when compared to unit volumes for RGB OLED smartphones, where expectations for OLED smartphone unit volumes are between 590m and 630m this year, however if we model the average size of an OLED notebook in 2021 as 14.5” (9:16 aspect ratio) and the average size of an OLED smartphone being 6.5” (9:19.5 aspect ratio), the 3.5m units expected this year would be the equivalent of just under 20m smartphones, and next year’s just over 6m OLED notebook units would be the equivalent of 34m OLED smartphones, assuming no average size growth for notebooks, which will likely not be the case.  As the growth in average smartphone area is close to a peak (excluding foldables), and the OLED notebook (and potentially monitor) sizes are still at the low end, that multiplier will continue to grow alongside the unit volumes, giving the RGB OLED notebook business a number of heady expansion years going forward.
*To learn more:
http://scmr-llc.com/blog/gen-8-rgb-oled-expands
http://scmr-llc.com/blog/samsung-display-the-big-oled-story-continues
http://scmr-llc.com/blog/samsung-oled-tv-update
​