​As we have noted, Samsung Display (pvt), LG Display (LPL) and most recently China’s BOE (200725.CH) have been working toward developing the technology necessary to produce IT OLED panels on larger substrates, moving from Gen 6 sheets, which are 2.78 m2 to Gen 8.5 sheets, which are 5.5 m2 to increase the efficiency of the process.  Recently is seems that other OLED producers are also looking to make such a change, although we believe the motivation and potential for success are different from those producers mentioned above.  Visionox (002387.CH) has been the name most often mentioned as a potential developer of such technology, although we have our doubts as to whether such stories are anything more than self-promotion.
As OLED display technology migrates to larger devices, OLED deposition technology comes up against some roadblocks, the largest of which is the use of fine metal masks that force gaseous OLED materials to form the pattern on substrates that become pixels on a display.  These masks are made of a nickel/iron alloy that is able to remain stable under the heat and high and low pressures found in OLED deposition equipment, as it is absolutely necessary that the FMM ‘screens’ keep the OLED materials in perfect order and spacing during production.  While the FMM are designed to handle heat and pressure they must also react to gravity, which can cause them to sag and misplace pixels, causing a panel to fail.  While this is not a problem for small OLED displays, such as those used in watches and smartphones, as the displays and masks get larger, such as might be the case for notebook or monitor panels, the effects of gravity get worse and yield management becomes more difficult.
Currently the number of OLED displays produced for IT products is relatively small when compared to smartphone production, but that is expected to change over the next few years with OLED adoption increasing for such products, which makes solving the production issues with larger OLED panels all the more important.  It is especially important to SDC, LGD, and BOE, all of whom are OLED display suppliers to Apple (AAPL), who is expected to continue to migrate more display based products to OLED.  Each of the three has been working toward find solutions that will improve OLED IT panel yields, each with their own ‘slant’ to the problems, but with each knowing that they have the ‘ear’ of Apple as they progress.  Visionox however is not a supplier of flexible OLED panels to Apple, with Chinese brand Honor (pvt) their biggest OLED display customer, along with Xiaomi (1810.HK) for whom they produce OLED watch displays.
To give some perspective in 2021, Honor purchased ~24m OLED panels, and while that might sound like a large quantity, it represents ~3.9% of the OLED display market (unit volume), and while Xiaomi has a larger share (~13.9%) given the size of OLED watch displays relative to smartphones or OLED IT panels, it represents only a small amount of small panel OLED industry capacity.  Apple however purchased ~184m OLED displays last year, most of which went toward iPhone production, giving them a ~29.6% share of the overall small panel OLED market, which is why the three mentioned above are working so hard to solve OLED IT production issues, especially under the assumption that Apple will continue to expand OLED penetration among its IT products.  While all three OLED producers are taking R&D risk and potentially large capital risk, the goal of becoming a primary supplier of small panel IT OLED products to Apple is in their headlights.
That said, it is not the same for Visionox, who would have to get qualified as a primary small panel OLED supplier at Apple before they would even have a shot at competing with SDC, LGD, or BOE for Apple’s incremental OLED IT business, so why would they circulate such stories?  Industry folk, and we certainly can see their point, infer that it is to garner support from the Chinese government in the form of subsidies.  Much of the early construction costs and operating expenses for panel producers in China are paid for through provincial or city-based subsidies that can defray construction costs that might normally be prohibitive, allowing Chinese producers to grow more quickly than non-subsidized producers, and during the early years of operation, those subsidies can offset low yields and low utilization rates for Chinese fabs.  As China has already become the capacity leader in LCD panel production, government organizations are want to give subsidies for such capacity, but a challenge to incumbent OLED leaders like SDC and LGD can still garner local government financial support, giving Visionox the hope that by dangling the idea of building out capacity to challenge others for Apple’s OLED IT business, they might set the wheels in motion for potential government help.
Visionox is said to be testing the OLED IT waters at its V3 Gen 6 fab in Hefei to work through production issues, and then would build a new Gen 8.5 OLED line in another location.  The V3 fab is being built in two phases with “the 2nd phase promoted in a timely manner” according to the company late last year.  Perhaps additional financial support is being hinted at for the phase 2 construction and equipment, which we had expected to be completed later this year, although not oriented to IT panel production.  If Visionox is able to solve the necessary IT OLED production issues on the V3 phase 1 line, it would encourage funding sources to push forward with phase 2 and potentially add a new Gen 8.5 fab designed specifically for IT OLED panels.  By indicating that there was potential for a new Gen 8.5 OLED fab to be built, the company can begin selling the idea to city leaders in other locations to see if funding is available and hopefully create a bidding war, similar to what occurred when Samsung was looking for a new silicon fab location in the US.
There is a lot of speculation here, but certainly not any that has not been seen by us over the years in the display space, so while we don’t like to speculate, the Visionox story has many similarities to others we have heard over the years, and feels as if we have been to this rodeo before.  We could be wrong, with Visionox much further along with Apple or the technology needed for IT OLED production, but we are less sanguine about the idea knowing that Visionox only grew their share of the small panel OLED market from 4.7% in 2020 to 4.9% in 2021, while Samsung Display and LG Display’s real competitor BOE grew its share from 7.3% in 2020 to 10.0% last year, which amounted to a 66.9% increase in unit volume y/y.  Without a very dedicated customer base already established, we expect it will be necessary for Visionox to win a few more games before they build ‘it’, especially knowing who ‘they’ are.

Small panel shipments, essentially those for smartphones, can be a difficult business for panel producers as it is not only a highly competitive market but one that has become bisected by two opposing technologies.  Traditionally, LCD displays have been used in smartphones, but over the last few years OLED smartphone displays have become quite important to smartphone brands, especially in flagship or premium priced phones.  The number of colors a display can reproduce is not determined by the type of technology used but the number of shades of each color (red, green, blue) that the display can reproduce (known as bit depth)., with the standard being 8 bits or 16.777m colors[1].  OLED displays however are self-emissive, meaning each red, green, and blue sub-pixel can be off completely, on completely, or a number of gradations between the two, which, in theory provides infinite contrast[2].  LCD sub-pixels contrast is controlled by the backlight that shines through or is blocked by the liquid crystal, however there are far fewer LED backlight ‘sources’ than there are LCD sub-pixels, so if an image calls for a black area right next to a white area (such as a star field) the black area will appear grayish rather than pure black as the LED behind both pixels will be on for the white ‘star’.
This gives OLED displays an advantage over LCDs in terms of contrast, and RGB OLED displays also have a faster response time, keeping fast moving objects from smearing or leaving trails as they move across the screen, which can be a problem for LCD displays, but OLED displays do have some issues, primarily they do not usually produce as much light (brightness) as LCD displays.  As the OLED material itself is generating the light, the OLED material itself determines the basic brightness of the display, while LCD display brightness is basically determined by the brightness of the LED backlight[3], so it is incumbent on OLED material suppliers to constantly improve such materials to compete with LCD small panel displays.  OLED RGB displays also have another issue in that the three OLED materials used to create colors do not age at the same rate.  This can cause an effect called ‘burn-in’ that creates ‘ghost’ images of banners or other images that remain on the screen for an extended time, such as a logo on a news show.
But even with these issues, OLED displays have become popular enough to dominate the premium smartphone category and take a significant share of the total smartphone market, a bit over 40% depending on the source.  We estimate that between 615m and 620m small panel OLED displays were shipped last year, up 20.8% over 2020 shipments and representing 45.7% of mobile device shipments based on our composite smartphone shipment totals, an increase from 39.6% in 2020.   However much has been said recently about how Chinese small panel OLED display producers have been gaining ground against the incumbent leader, Samsung Display (pvt), and as the dominant supplier of small panel OLED displays, it is inevitable that SDC’s share of that market will be reduced as other producers ramp production capacity and develop the expertise needed to maintain acceptable yields.
We believe that SDC’s share of the composite[4] small panel OLED market decreased last year from 77.6% to 70.5%, although SDC’s unit volume increased over the same period by 9.8% while all other producers gained share and expanded unit volumes.  As referenced below, there are both rigid and flexible OLED small panel displays in those numbers and a bit more granularity can be determined, especially as flexible small panel OLED displays carry higher ASPs, making them more lucrative for those that are generating high enough yields and utilization to remain profitable.  Looking specifically at flexible small panel OLED displays only, there was more intense competition from suppliers and SDC’s share in 2021 declined to 56.9% from 68.3% in 2020, although again, SDC’s actual flexible small panel OLED shipments grew in 2021, despite the share loss. 
The problem is scale, and while the flexible small panel OLED market saw a 28.2% increase in shipments in 2021, SDC’s growth was below overall industry growth because of its size.  The same goes for the composite small panel OLED market shown in Figure 6 and follows in the rigid small panel OLED category also, where SDC has an even bigger share (83.7% in 2021 down from 88.0% in 2020).  Samsung has the choice of further expanding small panel OLED capacity to continue to maintain share, or concentrate on higher value small panel OLED products.  A continued domination of small panel flexible OLED products would seem to be the proper goal, but SDC has taken it one step further and has become the dominant force in foldable OLED displays, which carry an even higher price premium than flexible small panel OLED displays, which tells us that SDC’s advanced planning for small panel OLED tends to be far ahead of most others.  Of course, it is easier to make such decisions when you are as large as SDC and have a parent who is among the top smartphone suppliers globally, but SDC has to make such decisions in a vacuum and cannot anticipate how fast they will progress down the learning and profitability curve and whether their assumptions about small panel flexible OLED pricing are correct as to price and timing. 
While others proclaim the loss of share as the end of the Samsung Display ‘era’ we point to the LCD large panel space where Chinese panel producers have built out significant capacity and now hold a dominant share of the large panel LCD market.  While this was a good strategy for much of 2020 and part of 2021, we look at a longer-term view and expect that the small panel ‘generic’ flexible OLED market will become crowded more quickly than expected, and competition, even between Chinese producers will become even more intense.  While SDC will lose more small panel flexible OLED in 2022, the real question is whether they will maintain profitability growth in a static pricing environment and whether that will hold true in a weak pricing environment.  The idea is to make money, not wave a flag, so we are still on the side of the SDC philosophy, even if it means losing share.


[1] Example: Adding 2 more bits of information to each of three colors changes the possible color combinations from 16.777m possible color combinations to a staggering 1.073b color combinations.

[2] Contrast: The difference from the deepest black and the whitest white,

[3] Brightness in LCD RGB displays is also reduced by the color filter used to generate each colored sub-pixel.

[4] Both rigid and flexible small panel OLED displays.

​The on-again/off-again negotiations between Samsung Electronics and LG Electronics’ (066570.KS) subsidiary LG Display (LPL) have been reignited according to industry sources (unconfirmed) in China.  As we have noted in the past, Samsung’s desire to offer a complete line of display options to its customers and the relatively low production capacity of its own QD/OLED display production, have been pushing the company to procure OLED TV panels from rival LG Display.  Rumors that prices for a high volume contract that would likely span at least two to three years has been a sticking point that has kept the two companies from such an agreement.
The most recent rumor-mill states that progress in the negotiations has been made and an agreement is getting close to being signed, but in the case of a commitment from both parties, which would likely entail additional capital spending on LGD’s part and a guaranteed financial commitment from Samsung, there will be lots of details to be worked out.  In such a case we doubt the more typical ‘cooperation agreement’ typically used in China, would suffice, so we expect if Samsung is to release its own ‘OLED’ TV this year (other than the QD/OLED), it would have to forge such an agreement by June or July, which gives LGD a bit more negotiating power if Samsung stays on its September rumored release date.  That said, Samsung can still walk away at any time and get its marketing gurus to come up with a reason it has decided to postpone such a release.  Since LGD is the only producer of volume large panel OLED displays, its going to be a question of whether an agreement can be reached within the next 90 to 120 days and whether Samsung is able to gather the necessary components (drivers, etc.) to make this all happen for the holiday selling period.
Some say it is a win-win situation for both parties, but that seems rather naïve as there is considerable ‘face’ involved in such a deal.  Samsung has pointedly stated that OLED is not well suited for large panel displays and discontinued its own large panel OLED development program years ago, particularly due to the use of a color filter in OLED TVs, which reduces brightness but creates the colors necessary for typical displays.  LGD will gain a potentially big customer but parent LG Electronics will now face another fierce competitor in Samsung, which will likely put some pressure on OLED TV margins, so it is not as cut and dried as one might think.  There is also the financial commitment and the capacity necessary to meet that commitment, which could entail further capacity expansion on the part of LG Display, and once that commitment is implemented, should Samsung back away for any reason, LGD will be stick with potentially excess OLED TV panel capacity, something LGD has faced years ago in its dealings with Apple (AAPL).  At the same time, should LGD be ‘unable’ to meet the supply requested by Samsung, there could be considerable friction between the two as Samsung would be unable to meet its own TV production commitments.  Its like two tightrope walkers trying to pass each other while over the Grand Canyon...

​As far back as 6/24/20 we noted that strained relations between Japan and South Korea has pushed the South Korean Ministry of Trade to sponsor a Fine Metal Mask ‘bakeoff’ pitting a number of South Korean companies against each other to find the best production methodology to develop an in-country supply chain, allowing South Korea to become less dependent on Japan for this critical part of OLED production technology.  The South Korean Ministry of Trade chose APS (054620.KS) (laser patterning) and Poongwon Precision (pvt) (etch) as the winners in the project, leaving Philoptics (161580.KS) and Olum Materials (pvt) to work on their own. 
Much of the momentum behind the South Korean government’s interest in Fine Metal Masks is due to the fact that the world’s largest producer of OLED displays, Samsung Display (pvt) buys almost all of its masks from Japanese suppliers Dai Nippon Printing (7912.JP) and Toppan Printing (7911.JP) who dominate this market.  The masks, which must meet extremely fine tolerances in order to correctly pattern OLED materials, must be cleaned and replaced regularly, and any disruption in mask supply could slow or halt OLED display production, regardless of whether the reason is political or production related. As the material used to produce such masks is made from Invar, an iron/nickel alloy (36% - 42% nickel) and the price of nickel has increased from $20,912/ton at the end of last year to $35,500/ton now (with a peak of $48,196 in the interim), as Russia is a top 5 producer, the sensitivity toward ensuring mask supply and proper pricing has returned.
To make things even more difficult, there are a number of ways in which the masks can be made, with Dai Nippon and Toppan using an etch method while APS uses laser patterning and Philoptics uses electro-forming, a method that deposits the metal on a mandrel.  When the South Korean government created the ‘bake-off’, much was to see which technologies would be most practical, with laser patterning and the more standard etch winning out.  That said, Philoptics has continued to refine it electro-forming process, despite its bakeoff loss, and has been supplying evaluation product to a Chinese OLED panel producer.  The company expects that the evaluation process, which began late last year will take roughly a year and will begin to generate sales (if accepted) in 2023.  The Chinese OLED producer is looking to add a mask supplier as it depends entirely on Japanese mask producers and Philoptics also hopes to sell to Samsung Display as well, although a similar qualification process would have to be completed.

LG Electronics (066570.KS) has announced prices for its 2022 OLED TV line, or at least some of it.  What they have released is the pricing for the “C” series and the “G” series OLED TVs, which are the top two price tiers,  and the “B” series, which are mid-range models,  leaving the “A” series, which is the low-end of the OLED line undefined.  In the table below we compare current (2022) TV set initial prices with last year’s initial prices and where they are currently to give some idea as to how they might decline over the coming year.  We note that the "B" series was not expected to be released in the US last year but eventually made it way to the states as a special offer on the LG website only, which is why that data is omitted.
The “B” series 2022 pricing is 4.6% higher than the 2021 “B” series, while the “C” series is 5.1% lower and the “G” series is also 5.1% lower.  A smaller size (42”) was added to the “C” series this year as was a 97” model to the “G” series, although the 97” model has yet to be priced.  When comparing 2021 initial pricing against where the sets are selling today, the “B” series is down 32.6% from initial pricing, the “C” series is down 29.9% from initial pricing, and the “G” series is down 25.8% from initial pricing.  We note at the bottom of the table is the pricing for Samsung’s (033570.KS) QD/OLED TVs for comparison and are 9.1% (55”) and 16.7% (65”) more expensive than LG’s most expensive “G” series 2022 OLED TVs, less than we had anticipated given the relatively early stages of QD/OLED panel production.

We have noted recently that Samsung Display (pvt) has had differing opinions about an OLED technology called ‘tandem’ or ‘dual stack’ structure.  In typical smartphone OLED displays the OLED materials, particularly the emissive OLED materials are arranged in layers between an anode and a cathode, with three (Red, Green, Blue) sub-pixels making up a single pixel that can display millions of colors by varying the mix of the three.  The key process for producing OLED displays is deposition where the materials are heated in a vacuum until they vaporize and then settle on a substrate after passing through a mask that patterns them into sub-pixel ‘dots’.  In an OLED display a backplane of thin-film transistors (TFT) control each subpixel by providing a ‘push’ that causes the materials to produce light and create a full color image.
OLED materials are relatively complex and are continually being developed to increase their efficiency and light output, but said materials have some limitations such as a point at which applying more ‘push’ does not generate more light and can degrade the materials more quickly.  This limits OLED display ‘brightness’ relative to non-emissive displays that use a backlight to generate brightness, which has led some to criticize OLED display technology as ‘not bright enough’.  While new OLED materials continue to push those limitations, a number of OLED panel producers have been developing a new OLED structure that places two OLED stacks on top of each other, creating a brighter display, but there has been some controversy among suppliers as to whether this approach is a viable one for OLED displays.
LG Display (LPL) is the only OLED display supplier to have the production capabilities to produce such tandem OLED displays and uses them for automotive displays that must meet strict brightness specifications, however Apple is looking to incorporate such an OLED solution in products in order to quell potential brightness issues in a number of its products, particularly tablets and laptops.  As Apple’s largest OLED display supplier is Samsung Display, SDC was charged with developing a dual-stack OLED 11.9” display for a potential iPad product but said project was cancelled in 3Q last year, reportedly as SDC could not find a way to produce such a display economically given the additional process steps and process modifications needed for the new structure.  However, as we recently noted, SDC decided to get back into ‘Dual Stack’ development, likely as China’s BOE (200725.CH) has indicated that it is modifying some of its OLED capacity to produce dual-stack displays.
But all is not rosy even for BOE, who has recently become a 3rd supplier of OLED displays to Apple after an arduous qualification process., as there is another aspect to Apple’s desire to implement a tandem stack OLED structure in future products, and that is the backplane that controls the OLED pixels.  There are two competing control structures that are used in OLED displays, LTPS (Low Temperature Polysilicon) and LTPO (Low Temperature Poly-Oxide), with the former the most common.  LTPO however is Apple’s choice for its premium iPhones and will likely push to expand LTPO’s use across more products as it requires less power, improving battery life in mobile devices.  Samsung Display has been Apple’s primary LTPO OLED display supplier, with LGD beginning to compete in that arena, but BOE does not have sufficient LTPO capacity to provide a dual stack device using LTPO in the quantities needed by Apple. 
According to South Korean trade press, BOE was in talks to supply a tandem OLED display to Chinese smartphone brand Honor (pvt) but rejected the brand’s request for that device to also incorporate LTPO under the theory that while the dual-stack structure could reduce the power consumption of the device by 30%, the application of an LTPO backplane would not add enough additional power savings to make it worthwhile to produce.    On the surface that seems plausible however given BOE’s lesser experience with LTPO production we expect the allocation of resources to building out their LTPO production and their dual stack initiative might have proved to be a bit more than BOE was willing to take on, particularly as the dual stack structure requires two deposition lines instead of one or a 50% reduction in capacity if the same deposition line is used for both stacks.
Apple is certainly a demanding partner to display producers but with unit volumes at or near the top of the industry and a willingness to pay a premium for cutting edge technology, the company represents a massive source of revenue over time, albeit not without risk and/or cost.  If Samsung Display was willing to change their mind about a dual stack structure, likely at Apple’s behest, than we expect BOE might also decide that the opportunity is too lucrative to miss sometime in the near future, especially as Samsung Display is not the leader in tandem OLED structure production, as they are in most other OLED display production modalities.  We are still in the early stages of this horserace.

The fear of burn-in for OLED displays can be either a reality or a promotional tool for proponents of other display technologies, however OLED display designers have been working toward eliminating or reducing the problem since OLED display came to market.  Burn-in is not new.  It was an issue for CRT (Cathode Ray Tubes), particularly black and white displays or the monochrome monitors of the early days of personal computers where screen phosphors that were illuminated by a logo or similar image left ‘ghosts’ that were visible when the screen images were darker.  LCD displays, while there are ways in which they can also be ‘ghosted’, are less susceptible to burn-in and when it does occur, it is easily reversed in most cases.
When it comes to OLED displays burn-in was a particularly worrisome issue years ago but has been addressed in a number of ways by OLED display designers.  The cause of OLED burn-in is the uneven use of the three OLED materials that are used in each OLED display pixel (RGB displays, such as smartphones and tablets).  If an image remains on the screen for an extended time in a single location and is a particular color or shade, such as deep blue, the blue sub-pixels will be ‘on’ more than the other colors and therefore will ‘age’ faster than the others.  As OLED materials see reduced output as they age, a white screen (which implies all colors are ‘on’) where a blue image has been persistent, will see less blue in the white where the aging was most prevalent, meaning the pixels that have been persistently on will look slightly different than the other white pixels, creating a ‘ghost’ of the persistent image.
There are ways in which this can be avoided, with the most effective being not to watch programming that has persistent images, but that is certainly not a practical solution.  Second would be not to leave your display on if you are not watching it, or turning down the brightness, but there is little a user can do if they are watching CNN or sports channels where logos are extremely persistent so display designers have come up with solutions that help to mitigate the problem.  One such is to shift pixels.  At regular intervals, each pixel in an image is shifted left, right, up, or down, so the wear on a particular sub-pixel color does not fall on that pixel at all times.  This movement is not noticeable to the user but ‘spreads the wealth’ across more pixels, reducing the wear on any single one.  Extending the lifetimes of OLED materials is also a viable solution to burn-in, as the longer it takes for a material to degrade, the longer it will take for burn-in to occur under the circumstances described above, but that is a task left to material scientists.
While many studies have been done concerning burn-in, most are done in labs with display metrics measured with sophisticated equipment that would generate terabytes of data and innumerable graphs and charts, but do not accurately give a consumer a ‘real world’ picture of what to expect with OLED burn-n on a practical basis and this is where the ‘average’ Joe comes in.  The Nintendo (7974.JP) Switch offers an OLED display for its game device.  We believe the display is produced by Samsung Display (pvt), the leader in small panel OLED displays, so the quality should be above reproach, but who is willing to leave their game device on for hundreds or thousands of hours to see if it burns in?  If hundreds are willing to eat Ghost Peepers or dance naked on YouTube (GOOG), then there are those that would be willing to forego playing games for150 days to rack up a 3,600 hour ‘real world’ test to see the actual effects of burn-in.
While this is certainly not a scientific test and the conclusion is subjective, but YouTuber and Twitch (AMZN) host Bob Wulff, was willing to put his Switch through a 3,600 hour test with a single image from “Zelda, Breath of the Wild”, set to maximum brightness.  During the 1st 1,800 hours, there were no image issues but after the next 1,800 continuous hours he noticed small ‘ghosting’ images that were sometimes discernable during game play, but were easier to see when the Switch image was set to a single color full screen image.  We note that the Switch, in portable mode, does not use pixel shifting or screen dimming, so the average OLED display would have access to these fixes while the test did not.  Mr. Wulff is hoping to keep the test active until he brings the system to “an unplayable state,” and will report back with results when that happens, but for now it seems that the fear of burn-in for OLED, in this non-scientific but practical test, is rather small, but we note that the displays used in the test were produced last year, so one might be careful in researching what year a potential OLED device was produced as older display might not have the same characteristics.  See the actual video below.

https://youtu.be/PaC5RbGAeVo
​

Having a single supplier of a key component is a dangerous position to be in any industry, but when it comes to OLED displays it is even more dangerous.  The most important process step in the production of OLED RGB displays, the type used in almost 750m small panel OLED displays last year, is the deposition of OLED materials which need to be precisely patterned across the display.  With pixel densities averaging almost 400 pixels/inch in recent smartphones, and each pixel being composed of at least three sub-pixels, the placement of each ‘dot’ of OLED materials is done by depositing materials through a FMM (Fine Metal Mask), a thin sheet of INVAR, a nickel-iron alloy that is very stable during temperature changes.  The mask can be thought of as a screen, although the accuracy of the space between the ‘holes’ has to be <±15 µm and the position accuracy is <± 2µm.
The masks (called ‘sticks’) are arranged in a frame that that covers half of a substrate, usually 4.9’ x 6.1’ (29.9 ft2), which enters the deposition chamber.  The OLED materials are heated in a vacuum until they vaporize and are pushed into the chamber and settle on the substrate wherever the FMM holes occur.  Given that the temperature inside the chamber is similar to the temperature needed to vaporize the materials (as high as 500⁰F), the mask material must be able to remain rigid, however while the OLED material is deposited through the mask holes onto the substrate, it also clings to the chamber walls and the mask itself.  This means the chamber must be cleaned periodically to avoid collected materials falling on the substrate and the mask must be replaced after ~1,000 uses.  As a 15,000 sheet/month OLED line runs ~500 sheets/day (1,000 half sheets), such a line would use ~30 masks each month at a cost of between $50,000 and $125,000/month/line depending on the mask’s precision.
More important than the cost of the masks is the fact that there are few manufacturers that can produce such masks at the tolerances needed, with the industry being dominated by Japan’s Dai Nippon (7912.JP), the sole supplier to Samsung Display (pvt), the largest small panel OLED producer, which leaves SDC beholden to Dai Nippon’s material sourcing, production, and pricing.  There are a few other suppliers, such as Toppan (7911.JP) and Darwin Precision (6120.TT), but they tend to deal with Chinese OLED producers and do not meet SDC’s quality standards.  It seems that SDC has decided to evaluate FMMs from a local South Korean firm, Poongwon Precision (371950.KS) to see if their masks can qualify as an alternative to Dai Nippon’s product.  Not only will the quality have to be matched but the price will have to be low enough that SDC will risk its relationship with Dai Nippon by adding a 2nd supplier.
While such qualification processes take time, we expect that even with commercial level qualification SDC will limit a new FMM supplier to a single line or fab in order to make sure the product stays consistent, while using that leverage to negotiate price with Dai Nippon.  Given that the mask business is one with high barriers to entry and Poongwon has been producing same for roughly 5 years, there are few alternatives for SDC if this relationship does not pan out and the company will remain constrained by a single supplier relationship for all of its small panel OLED production. 

The OLED lighting world is a quieter, gentler place than it was back in 2016 when LG Display (LPL) announced it would build the world’s first OLED lighting fab, a Gen 5.5 production line that would churn out 15,000 sheets/month of panels to be used for both task lighting and in high-end retail lighting.  The fab was an outgrowth of LG Display’s R&D development program with affiliate LG Chem (051910.KS) all the way back in 2000, which resulted in various prototypes being shown through the end of 2009 when parent LG Electronics (066570.KS) bought Kodak’s (KODK) OLED business (Kodak was the ‘inventor’ of OLED years before) and began development of a commercial OLED product and lighting line.  While Sony (SNE) was the first to produce a commercial OLED TV (11” XEL-1)  in 2007 (only a few thousand were produced), LG was still a bit cautious about OLED, adding relatively small production capacity primarily for small panel OLED development, but within a year the company was on its way to becoming the leader in OLED TV and in 2013 affiliate LG Chem began producing OLED lighting panels in 2013, with a consolidation of LG’s OLED businesses into one company under LG Display, along with the abovementioned OLED lighting fab.
Unfortunately the OLED lighting business did not develop as quickly as expected, and along with a number of other early OLED lighting company projects (Panasonic (6752.JP), Philips (PHG), GE (GE), OSRAM (OSR.GR), etc.) the company pulled the plug on the OLED lighting business in early 2019, converting production to automotive OLED development.  Since then the OLED lighting world has been a quieter one, with a few companies still producing OLED lighting panels, particularly OLEDWorks (pvt), Kaneka (4118.JP), Konica Minolta (4902.JP), and Lumiotec (7717.JP) while a number of lighting manufacturers, particularly Acuity Brands (AYI) incorporate OLED lighting offerings in their broad lighting product lines. 
OLED lighting has been used a bit more extensively in the automotive space given its ability to be shaped, its light weight, a wide viewing angle, and its broad surface as opposed to a point light source, which give it an edge over incandescent and LED tail and signal lighting in high-end automotive taillight and signaling applications and makes it able to be ‘programmable’ down to the pixel level, allowing for truly customizable lighting patterns, as seen below, and OLED lighting has been used in a wide variety of architectural applications and commercial products.
That said, OLED lighting has faced a number of issues since its first lighting applications, with both cost and lifetime being the big stumbling blocks to mass adoption, and that has pushed the technology into more of a niche mode that it rightly deserves.  Cost is still an issue as an OLED light source is more expensive than an LED light source, but when placed in a package (luminaire), where an LED luminaire would need a diffuser, heat sinks, and other components, the cost of OLED lighting becomes more comparable as it needs little else other than a driver to operate.  While the lifetime issue has been a problem in the past, OLED lighting panel producers have worked around that issue by developing OLED lighting panels with multiple OLED ‘stacks’ (6 for some of OLEDWorks panels), that increase the panel lifetime to over 100,000 hours, which is more than comparable to LED lighting.
While all of the improvements in OLED lighting, and its innate abilities and characteristics should give it some momentum in the lighting world, there is such an infrastructure built around LED lighting and so little for OLED lighting that the technology tends to be used for lighting applications that are specific to its unusual characteristics.  One such unusual application we found is a test of OLED lighting on the USS William Lawrence, a Guided Missile Destroyer.  Typical Navy lighting is a two tube fluorescent fixture which operates on 120 Volt AC, which requires chassis bonding and grounding to prevent shock.  OLED lighting operates on low-voltage DC current which does not have the potential power losses across long distances onboard and can be worked on without cutting power.  More important is the fact that equivalent OLED lighting panels are 75% smaller and weigh 50% less than MIL Spec lighting, and are able to withstand the same vibration and shock tests as their fluorescent counterparts.  OLED shipboard lighting’s smaller size gives it an advantage in narrow compartments and passageways and can more directly conform to bulkheads, increasing clearance, and the fact that it is cool to the touch adds to its advantage over fluorescent and LED equivalents, which generate more heat that must be eliminated.
The OLED lighting project on the USS William Lawrence has been jointly developed by OLEDWorks, a Rochester, NY company, and Atlanta based Acuity Brands in order to test the viability of OLED shipboard lighting, but the bottom line for the project is the relative cost of OLED lighting when compared to typical MIL Spec.  While we have not seen the data, the companies involved have calculated that when including all of the advantages mentioned above, installation and maintenance, spare storage, and weight considerations, the cost of OLED lighting is 15% less than existing fixtures and saves 9 tons of weight. 
The only issue that remains is the OLED panels tested in the lab fell short of the candlepower requirements by between 10% and 20% although in physical mock-up trials for offices, workshops and compartments the panels met specifications, and in areas that needed red or amber lighting OLED panels provided the same glare-free light which can be included in a white light OLED fixture and easily switched from white to color as opposed to fluorescents that would need separate fixtures.  OLED light panel producers expect that they will be able to increase the light output for shipboard lighting within the next year or so, making OLED lighting an effective replacement for shipboard fluorescent lighting, and while military applications require an extensive qualification process, there are few applications that have a longer tail, which gives OLED lighting producers hope that the overall OLED lighting market will develop from niche applications to a large scale production market over the next few years. 
While competing with LED lighting in the broad illumination market is a difficult game, such specialized applications can become the lifeblood of an industry and can provide the demand needed to expand OLED lighting and reduce costs.  OLED lighting is still a niche product but as the OLED display market continues to expand, the OLED lighting market will take advantage of some of those production techniques and processes and adopt others that are more specific to lighting, such as roll-to-roll deposition, new OLED materials, or more efficient light extraction methodologies.  Given the ability of OLED lighting to conform to any shape OLED lighting panels represent a transformative approach to traditional lighting and as costs are reduced should find its way into non-traditional lighting solutions where architecture become lighting.
 

​The layers of materials used in an OLED display are quite thin, with key layers as thin as 10nm, but when those materials are used in hundreds of millions of devices, those thin layers add up.  Suppliers of materials for OLED stacks are constantly vying for a place with key OLED display producers, Samsung Display (pvt) being the largest.  SDC changes it stack materials when it can see an appreciable change in stack performance, as such changes can spark considerable design and process changes and require requalification with customers, a time-consuming task that can have a number of iterations.  That said, a win can lead to considerable revenue and a (hopefully) long-term relationship with producers.
While there are a few stack materials where there is only one supplier, usually a material ‘helper’ that increases the effectiveness of a key stack material, a number of OLED materials see considerable competition, particularly those that are not in the emitting layer, as both red and green phosphorescent OLED emitters are licensed and produced only by Universal Display (OLED), while emitter ‘host’ material in which the emitter is ‘doped’ are produced by a number of suppliers.  As new stacks are developed by OLED producers material suppliers submit their latest materials for evaluation, with the intention of becoming or remaining a supplier of as many materials as possible in each new stack.
As we noted recently, Samsung Display will be updating its OLED stack later this year (M12) and there are already a few changes or additions to stack material suppliers.  While we cannot confirm all material suppliers yet, there are a few that we believe are confirmed, and a number that we believe will be confirmed eventually.  In the diagram below we show the typical OLED stack layers for Samsung’s most recent RGB OLED stacks (M10, M11) and M12 which will be adopted this year.  Those suppliers that we can confirm in M12 are in black.  Those that we believe will be chosen but have not confirmed are in red, and we note also that where multiple suppliers are listed, there is the possibility that a supplier for one SDC customer might be different from a supplier for another customer.  We thank UBI, The Elec, and a number of suppliers for their contributions to the graphic.