​In our 8/10/21 note we mentioned that South Korean tool vendor Wonik (240810.KS) had been competing with ICD (040910.KS) and Tokyo Electron (8035.JP) in developing a dry etcher product for Samsung Display’s (pvt) potential large panel RGB OLED project.  It seems that Wonik has won the competition, but not for the SDC large panel RGB OLED project, as the tool has been approved for SDC’s QD/OLED project, which has a stated capacity of 30,000 sheets/month.  The newly approved tool is used during the TFT production process, but the current line, which has yet to begin mass production, is using dry etch tools from both ICD and Tokyo Electron, so the expansion of the QD/OLED project will be the stimulus for Wonik actually selling its new tool.  
Much will depend on the success of the QD/OLED displays with parent Samsung Electronics, who has had an on-again/off-again view of the technology.  SDC has also been considering shifting its QD/OLED technology to quantum nano-rods, which, if done, would delay the etcher sales further, although the process at the TFT level is similar.  The competition between dry etcher companies for SDC’s large panel RGB OLED project continues, although the status of the project itself remains dependent on the ability of SDC and deposition tool partner Ulvac (6728.JP) to finalize a mass production vertical deposition tool that will allow for fine metal mask RGB large panel production without the size limitations that currently limit RGB OLED to Gen 6 fabs.
 

Over the last few years the CE industry has decided that blue light is bad for you especially when you are trying to go to sleep, and has implemented a number of systems that reduce blue light in displays.  Citing studies (mostly animal based) anti-bluers say the blue light suppresses the production of melatonin, a naturally produced hormone that is involved in a number of circadian rhythm systems in vertebrates including hibernation, blood pressure, and sleep-wake timing.  When released by the pineal gland at night it activates melatonin receptors, starting a cycle called dim-light melatonin onset which continues until the body is exposed to daylight, at which point the resulting proteins are destroyed and receptors are no longer stimulated.  That said, there is little evidence supporting the use of melatonin to induce sleep, with a 2017 study (Matheson E, 2017) indicating that taking Melatonin as a dietary supplement allowed sleep onset 6 minutes earlier but had no effect on total sleep time.
Some studies have indicated that exposure to as little as 2 hours of blue light can slow the natural production of Melatonin and can cause phototoxicity (skin and/or eyes become sensitive to light and can blister) and WebMD, source of much incorrect medical information, states “Blue light exposure might raise your risk for certain cancers”, but exposure to blue light during the day may have the opposite effect.  It’s used to treat seasonal affective disorder (SAD), a form of depression related to the changing of the seasons.  All in there is very little conclusive evidence that blue light (in moderate doses) is harmful, but it can be a rallying cry for CE companies that wish to present a woke face to consumers.
Apple (AAPL) has been a big fan of blue light reduction, having added a feature called ‘Night Shift’ to iOS in 2016 that shifts the display’s color mix toward ‘warm’ when it senses diminished external light.  Android phones picked up a similar feature soon after and almost all smartphones now have a ‘night mode’ that is supposed to help you sleep better.  However, a number of studies have indicated that the color shifting feature has little if any benefit, with an examination of whether Night Shift reduced the adverse effects of nighttime iPad use at the Lighting Research Center at Rensselaer Polytechnic Institute finding that the feature did avoid melatonin suppression more that the default settings, but not enough to make any appreciable difference in sleep quality.
In April a study (Kara M. Duraccio PhD, 2021) at Brigham Young University sampled 167 adults (18 – 24) with iPhones that were randomly assigned one of three conditions – iPhone use during the hour preceding bedtime with Night Shift enabled, the same with Night Shift disabled, and no phone use.  The participants were tested for seven nights with the outcome that there were no significant differences in sleep outcomes across the three conditions.  Further, for those averaging more than 6.8 hours of sleep per night, the ‘no phone’ condition generated the best results, and for those sleeping less than 6.8 hours/night there was no difference under any of the conditions, essentially concluding it is better not to use your phone before you go to bed, but not because of blue light issues.
While we have no documentation to prove our theory, we believe that while blue light might have a minuscule effect on potential sleep conditions, more likely is the mental tension derived from e-mails, texts, checking Instagram, and the host of other obsessive behavior that smartphones and social media has instilled in us.  Rather than drifting off into a night of restful sleep, we are thinking about whether that last post was really ‘about you’ or whether it was just a generally stupid comment.  Remember books?  They don’t generate blue or any other kind of light and a well-chosen one can work better than an Ambien.  “I think it’s good that books still exist, but they do make me sleepy” – Frank Zappa – The Real Frank Zappa Book.

​OK so you forgot to come up with a gift for your 6 year old while you were at the conference in Tokyo, but did you really buy that $400 Inflatable Water Park with Slide and Water Gun out of the SkyMall (pvt) catalog while you were dozing off in the middle of the Pacific?  Since its sitting at your front door, it looks like you did, but you can make sure the wife knows that you got it at a steep discount from its original price of $600, so it was really quite a bargain and its going to be tons of fun for the kids until it gets punctured and put in a box in the garage to be dealt with next year or until the kids are teenagers and the garage gets converted into a band rehearsal ‘studio’. 
But that is all going to change according to a project involving Royole (pvt), a Chinese display manufacturer who is credited with releasing the first foldable smartphone, the Flex Pai.  In a partnership with Airbus China (AIR.FP) put together in 2018, the companies have been working on replacing the typical airline magazines like SkyMall and those particular to a specific airline (many of which have been terminated as a result of COVID-19), with something a little more sophisticated and potentially practical, an OLED magazine.
The device, which is just entering actual test mode on one plane, is an iPad-like OLED display device that is flexible enough to be called a ‘magazine’ but still able to be used to order food (accepts credit cards), read ‘digital’ magazines and newspapers, stream TV and movies, and even give access to the internet.  Of course, there is hardware that must be installed on the plane and internet access would be governed by the plane’s Wi-Fi capabilities, but the idea is to replace both paper magazines and the back-of-the-seat entertainment systems that are currently on most airline flights.
While the product is not quite ready for release, it helps airlines from having to clean magazines after each flight (really?) and maintaining the oddball seat display systems that are currently available, bringing it down to cleaning just an iPad like device.  We expect there will be a system for checking passengers as they leave the plane in case they ‘accidentally’ place the device in their carry-on luggage, but despite our long-standing criticism of Royole, at least the concept is valid and could one day be an alternative to paper.
The question will be whether it is priced correctly, both to other carriers and to advertisers.  While flyers tend to be a captive audience, ad and content pricing also needs to reflect a reasonable rate that leads to a sale, such as an in-flight movie or similar content, and the system needs to have access to content that does not limit the passenger’s choices to make secondary purchases.  These are not simple tasks, especially while flying at 40,000 feet, but at least the device itself is beginning to take shape.  Airlines themselves will likely be a bit cautious about spending for such new projects after the ravages of COVID-19, but if there is no more alcohol on flights, what else is there to do but read, watch movies, or buy stuff.  Isn’t that what OLED was invented for?

The TV business has been a difficult one this year, with a weak Chinese market leaving growth to come from North America and Europe.  However as lockdowns are reduced the necessity for TV has diminished and coupled with rising prices has left the TV space with little to get enthusiastic about.  Large panel producers have been moving production to more profitable large panel products such as monitors and notebooks and while this would typically tighten the market and sustain panel prices, as we noted yesterday, TV panel prices have begun to fall.  While this is good for set manufacturers, potentially alleviating some of the cost escalation they have seen over the past year, we are less enamored of the generic TV space this year, while more open to growth in the OLED TV space, where panel production is limited to one supplier and is therefore a bit less prone to the competitive nature of the display business.
There are many good points relative to large panel OLED displays, and a number of issues, but from the standpoint of overall picture quality, they are still considered the pinnacle of TV commercial technology.  OLED TVs are more expensive than their LCD brethren, and do face direct and indirect competition from quantum dots and mini-LED technologies, but at least for now, we look at OLED TVs as Wagyu beef against the skirt steak of most LCD TVs.  As LG Display (LPL) is the supplier of almost all large panel OLED displays and LG Electronics (066570.KS) is the premier OLED brand, we look at the company’s current line of OLED TVs, which were announced in late March to see how pricing has changed so far this year.
While there are many LG OLED TVs available on Amazon (AMZN) and sites like Best Buy (BBY) or Costco (COST), we are only looking at the current year’s models, all of which will have a model format that looks like this: 

Therefore all 2021 models will be either G1, C1, or A1, so when hunting through sites for an OLED TV bargain, remember to check the year code to make sure you are getting this year’s models.  Pricing for such sets is usually highest on release, although pre-order deals can make a significant impact on initial set prices, but on a general basis, it is usually best to wait at least 3 – 4 months before buying new models, as prices tend to decline during the summer months.  
 As noted, because LG Display is essentially the only producer of OLED TV panels, OLED TV panel pricing sees far less price competition than with LCD TV panels, however over the last few years, as LG Display increased production and consumers became familiar with OLED TVs, there has been a bit more sensitivity toward set and panel pricing., more a result of improvements in LCD technology rather than direct OLED TV competition.   LG Display has also made improvements in its production methodology and built out capacity at its Guangzhou, China OLED fab, which has helped them to lower costs.  How much of that savings gets passed on to customers remains within LGD, but OLED TV set prices have certainly declined over the last few years as the number of sizes increases (both smaller and larger).
LG Display, likely at the request of LGE, introduced 48” OLED TVs last year, creating a lower price point that has attracted consumers by lowering the OLED TV entry bar to ~$1,200, with short-term discounts by some retailers bringing the price down to just under $1,000, with 48” 4K TVs ranging in price from ~$1,200 to as low as $332 for comparison.  This has caused gamers to look at 4K OLED TVs as potential oversized monitors, with LG promising to release an even smaller (42”) OLED TV specially designed for gamers later this year.  However it looks like LG has postponed that release until 2022 to avoid it getting lost among sets being released for the 2021 holidays and is now expected to preview the new size at CES next January.  LG already includes a few features that gamers desire, such as 120 Hz refresh rate, Dolby (DLB) Vision Gaming, but will add direct support for gaming consoles to the 42” model.

​With weaker TV panel prices expected in 2H, OLED TVs will have a tougher time competing against LCD and its variants, but we expect there could be a very different OLED TV market developing in 2022 and 2023.  If Samsung Display (pvt) is successful in developing a process for producing RGB OLED TVs (see our note 8/2/21, 8/16/21), LG Display could face significant competition and price pressure.  While we expect costs for even this new OLED process to be high at the onset, just the fact that there will be a new large panel OLED producer will change the OLED TV market, with consumers likely seeing lower priced product.  Much will depend on Samsung Display’s process and whether they are able to solve the myriad of potential problems that arise when moving from pilot lines to mass production lines, but we expect consumers will benefit.

In recent days we have mentioned FMMs (Fine Metal Masks) those screen-like components in the OLED material deposition process that allow those materials to be precisely placed in RGB OLED displays.  As noted, there are limitations as to the size of such masks, which limits their use to OLED production in fabs that are Gen 6 or smaller with Samsung Display (pvt) trying to find a way around that limitation so it might enter the OLED TV business with an RGB OLED TV.  In the interim, the RGB OLED industry continues to expand, new deposition tools are purchased and put into operation, which increases the need for FMMs, which are not only expensive, but need to be replaced regularly.
The FMM situation is made worse by the fact that there is really only one major supplier of such masks, Dai Nippon Printing (7912.JP), which holds an incredible share of the market at over 90%  Another Japanese firm Toppan Printing (7911.JP) also produces such makes, as do an number of smaller firms, but none even close to the scale of DNP.  Samsung Display, the leader in the small panel RGB OLED business, has a long standing agreement with both companies that guarantee’s it much of their supply, leaving others to work on allocation or find multiple smaller suppliers that tend to have inconsistent product or scheduling.  A recent study of the FMM market has indicate that there is a 31% gap between supply and demand this year as OLED RGB expansion projects continue, especially in China, and supply is strictly limited.
China has not taken the situation lightly as it impinges on both its goal of self-sufficiency and could limit its ability to compete with other OLED producers, particularly Samsung Display.  There are at least seven projects in China that are developing technology and process for mass production of FMMs, but even with over $500m spent toward that end, the most advanced is still in the product sample stage, which we expect will lead to both additional technology refinements and scalability issues, which leaves the industry in the same place it was last year and this year.  The same industry evaluation predicts that it will not be until 2025 until FMM supply and demand are close to being in balance, and that is if everything goes according to plan.  Until then, Chinese RGB OLED panel producers will have to line up behind SDC and keep those FMM cleaners running 24/7.

​Yesterday we indicated that Chinastar (pvt), a subsidiary of TCL, has been rumored to be supplying small panel OLED displays to Samsung Electronics, the parent of Samsung Display (pvt), who has been the exclusive supplier to Samsung in the past.    We believe that Chinastar has supplied a small number of OLED panels used for the Galaxy M smartphones sold in India, with Samsung likely using those displays to evaluate Chinastar’s capabilities as a larger supplier, similar to the way that Apple (AAPL) has been testing BOE’s (200725.CH) ability to enter its OLED supply chain. 
While much will be made of the fact that Chinastar has supplied OLED displays to Samsung Electronics, we expect, as we noted yesterday, that Samsung will proceed rather slowly with Chinastar to limit the exposure to potential early production problems and potential delivery delays.  Credit is due to Chinastar for meeting Samsung’s specifications but thus far no supplier other than Samsung Display has been allowed to produce OLED displays for Samsung’s flagship lines, so the mainstay of the Samsung parent/child relationship is still intact, but while Samsung Electronics continues to push small panel OLED down the smartphone product line, they face competition from state funded Chinese OLED suppliers, who push Samsung to lower costs. 
If Samsung Display is unable to or does not want to compete with Chinese small panel OLED producers for Samsung’s low-priced smartphone products, the door will remain open to other suppliers like Chinastar.  Does it mean that the end is near for Samsung Display’s dominance of the small panel OLED market?  Not likely as SDC has the expertise to not only produce displays to Samsung’s flagship phone specifications, but has created and helped Samsung Electronics promote the flexible display business.  SDC’s ability to maintain a substantial lead in that business continues to separate them from other small panel OLED producers and gives them the option of walking away from what is likely low margin business, even if it is from its parent.  Of course also having Apple as a large customer (shared with LG Display (LPL)) doesn’t hurt either.

​In our 7/28 note on LG Display (LPL) we indicated that the company has been reviewing plans for expanding its small panel OLED capabilities, an area that gets far less attention from the press than the company’s large panel OLED TV business.  With the dissolution of parent LG Electronics (066570.KS) mobile business, some questioned plans to expand small panel capacity, however Apple (AAPL) has been expanding its small panel OLED sourcing from LG Display and likely needs a strong commitment from the company if it is to go further.
LG Display made a statement today that indicates they have decided to proceed with those small panel expansion plans.  The investment will be $2.83b US to be spent over the next 2 ½ years but little detail was given so the possible alternatives are a Greenfield fab or and expansion or conversion of an existing fab.  LG Display’s main small panel OLED production fabs are E5 and E6, both Gen 6 lines with original capacity (combined) of 75,000 sheets/month, however LGD has already mentioned that an additional 10,000 sheet/month capacity expansion was expected at E6, which we expect will expand to 15,000 sheets/month.  Given the value of the announced investment we would expect another 15,000 sheet line, likely at the company’s production complex in Paju, South Korea, with the potential to expand to 30,000 if consumers warm to the concept of OLED for the iPad in 2023.
In the past Apple has made some upfront capacity investments by pre-paying for product.  This type of investment goes toward a ‘guarantee’ of capacity share or even a dedicated line, which we would not rule out as to how LG Display might finance this project, along with its other (large panel OLED) expansion plans.   Given the duration of the project, we expect LG Display will look to capitalize on that relationship or look toward the public markets to avoid adding additional debt, but we expect the investment in capacity will be staged carefully.  All in, it’s a medium sized project that will likely depend on how LG Display’s relationship with Apple progresses, and how successful Apple is with expanding its OLED product line over the next two years.

Samsung Display, the supplier of foldable displays for parent Samsung Electronics’ upcoming Galaxy Z Fold 3 smartphone has indicated that they have changed the pixel layout on the new phone’s display from what has been called the Diamond pixel layout, consisting of green ovals and larger red and blue diamond shaped sub-pixels, to a new layout called “Round Diamond Pixel™”, that gives the display a new name, Eco2 OLED.
Unless you take a microscope to the Z Fold 3 (when it is released later this month), you would not notice any difference in the way the phone looks, other than the fact that it might seem a bit brighter.  Samsung Display says that the new pixel arrangement eliminates the need for a polarizer that normally is used to reduce the amount of light that is reflected by the display, but also blocks some of the light coming from the display itself.  The new pixel arrangement eliminates the need for the polarizer, which SDC increases the transmittance of the display by 33%.  Such an increase, when throttled to the light levels of previous displays, would result in a power saving of 25%, so as a user, you will likely see less of difference in the display but an improvement in battery life.
That said, since the display is not the only power consuming component of a smartphone that 25% battery life improvement will likely not magically appear, but will be partially absorbed by other components that designers will add, knowing they have a bit more overall power to use.  As the new pixel arrangement allows the removal of the polarizer, the under display camera, also a new feature of the Fold 3, is able to gather more light, making it easier for the camera to work properly and avoiding pixel structure changes over the camera that have been the bane of other embedded camera systems.  Of course there is no free lunch, and the production cost of the new pixel arrangement, the first change for SDC since 2013, will be higher, even though resolution and ppi (pixels/inch) will remain the same.  Perhaps the lack of a charger in the Galaxy Z Fold 3 box will help cover some of that extra cost…

​TCL and it subsidiary Chinastar (pvt) purchased Samsung Display’s (pvt) Suzhou, China Gen 8 fab and panel business for $1.08b earlier this year, ending Samsung’s LCD panel production in China, but at the same time as the sale, Samsung purchased a $12% stake in Chinastar, making it the 2nd largest shareholder behind TCL.  Given that the Suzhou plant had been producing ~25% of Samsung’s TV panel needs, the sale to Chinastar and the share purchase seemed to indicate that Samsung would become a substantial customer of TCL/Chinastar going forward.  TCL has been providing ~15% of Samsung’s TV panel needs through both the Suzhou plant and its other large panel LCD fabs, but recently there have been rumors that Samsung will begin to purchase OLED panels from Chinastar, expanding that relationship into the OLED space.
What makes this a bit unusual is that Samsung Display has been almost the sole OLED supplier to Samsung Electronics, with Chinese panel producer BOE (200725.CH) also supplying some OLED displays, so the idea that Samsung is diversifying its OLED production base again begs the question as to whether this indicates a change in the parent’s relationship with its affiliate.  In reality, this is not the first time there has been some tension between Samsung Display and Samsung Electronics. 
When Samsung Display disclosed that it was intending to end production of large panel LCDs and develop its quantum dot/OLED technology, the assumption was that this was being done under guidance from Samsung Electronics.  However during the early development of the QD/OLED process, Samsung Electronics’ management did not express the confidence in the project that one might have expected and at one point it was hinted that they might not be the primary customer for the new technology.  Further, while Samsung Display had decided to close its large panel LCD production fabs by the end of last year, a request from Samsung Electronics has pushed out the closing of some of that production to a point later this year.  While the large panel price increases that have occurred since last year have made large panel production profitable, SDC seems to have acquiesced to its parent’s wishes, while getting the short end of the stick as to OLED, should the rumors prove true.
We expect that while Chinastar is pushing to ramp up their OLED production Samsung will proceed cautiously, as it has with BOE, as consistency is a big issue with OLED production.  Chinastar has one Gen 6 OLED fab that been built out to full capacity (45,000 sheets/month) and has R&D and development lines for large panel production, although we have seen little indication that the large panel lines are in commercial production, so much depends on that single Gen 6 OLED fab.  TCL did indicate that in the 1st half of this year they produced more OLED displays than through all of 2020, and that they were now the 4th largest OLED producer on a global basis, which implies either they shipped more units than we expected in 2Q 4m), or the value of those shipments was higher than we expected, as based on our 2Q OLED unit volume estimates for Chinastar, they would be 5th, just a bit behind Visionox (002387.CH) when looking at composite numbers, but they are #4 when it comes to flexible OLED only, so credit where due.

​We have noted (08/02/21, 08/10/21) that Samsung Display (pvt) has been developing an alternative method for OLED material deposition that would allow the production of RGB OLED displays on Gen 8 production lines.  The Samsung project has been in partnership with Ulvac (6728.JP) in terms of the deposition tool itself, essentially the heart of the process, but other tool vendors have also been developing equipment that would become part of the Gen 8 RGB OLED process and Samsung Display is not alone in trying to develop a Gen 8 RGB process deposition tool.  LG Display (LPL) has also been working toward the same goal, working with Sunic Systems (171090.KS) to adapt the process to the larger substrate format, and Dai Nippon Printing (7912.JP), the largest supplier of the FMM (Fine Metal Masks) that are what patterns the OLED material, has been developing larger masks that can be used in the new process.
Typically FMMs are limited to Gen 6 fabs or smaller as the masks begin to sag when they are larger than Gen 6.  This makes it impossible to produce patterned RGB OLED display on fabs above Gen 6, which limits the efficiency of the process.  By changing the orientation of the deposition tool from horizontal, where gravity works against the FMM to vertical, the mask size can be increased without losing the precise material alignment that the masks provide.  Since using FMMs has been the basis for the RGB OLED process, this would allow the industry to become more cost efficient without relying on new processes such as ink-jet printing and would give Samsung Display a way to directly compete with LG Display in the OLED TV space, without the compromise of using OLED materials and a color filter, which reduces brightness.
We have seen a number of other ‘vertical’ OLED process equipment but the most developed seems to be from OLEDON (pvt), a South Korean company that has been developing the technology along with a process that transfers the materials from a donor film that is pulled into the chamber via a belt.  However that process, while it allows for large substrates, is applicable to ‘open mask’ displays, such as LG Display’s OLED TVs and does not ‘pattern’ the material, which is SDC’s objective.
While we expect none of the OLED panel producers that are developing such process technology have fully committed to same, those decisions will likely be made after pilot lines are put into operation, likely next year.  If successful, product from the technology would likely become available 12 to 16 months later as production space is converted from existing or idle Gen 8 LCD production to V-OLED (Vertical OLED).  Again, if successful, this would have a significant impact on the large panel OLED space and would be a boon to the OLED industry as a whole, expanding large panel OLED production and making large panel OLED more price competitive against other existing or potential display technologies.