Samsung Display’s (pvt) QD/OLED display technology has faced some significant challenges.  Developed to bring Samsung Display into the large panel OLED business, which has been dominated by LG Display’s (LPL) WOLED panels, there seemed to be some skepticism from SDC’s parent Samsung Electronics (005930.KS).  We expect some of that skepticism came from low initial yields for QD/OLED, with Samsung needing a reliable source of high volume production before committing to the technology, but SDC persevered and refined production processes to more normalized yields.  Samsung Electronics adopted the technology in 2022 with 55” and 65” TV models, their first large panel OLED offerings since abandoning large panel OLED technology in 2013 and has maintained QD/OLED’s presence with additional sizes since then.  However with relatively limited production capabilities (~750,000 TV sets/year assuming 75% yield), Samsung seems to still be wary of relying solely on QD/OLED technology for its large panel OLED line and has purchased WOLED panels from LG Display to augment its large panel OLED offerings.
Quality does not seem an issue, in fact QD/OLED has been lauded for its color purity, color volume and higher peak brightness than WOLED displays, but despite these positive points parent Samsung still does not seem to have jumped into the QD/OLED pool deep-end and is offering both QD/OLED and WOLED (from LGD) to TV consumers, in some cases without disclosing which technology they are getting.  That said,  it seems that QD/OLED has found a home, and one that Samsung Electronics  seems to be in sync with; monitors, high-end monitors in particular.  Gamers, who look for high quality reproduction and rapid response time have been impressed with Samsung Display’s QD/OLED monitor product and a number of monitor brands have taken to QD/OLED for their flagship gaming monitors.
A quick look at Amazon (AMZN) or Best Buy (BBY) shows just under a dozen brands with at least one QD/OLED monitor offering, with sizes ranging from 27” to 49” and prices ranging from $589 to $1,285.  Considering that you can buy a 27” LCD monitor for under $100 and a 27” OLED monitor for under $500, QD/OLED monitors are certainly considered high-end, with most labeled ‘gaming monitors’ specifically.  Companies like MSI (2377.TT) and ASUS (2357.TT) offer quite a few QD/OLED models, along with more standard OLED and LCD models, while Samsung, maintains the lead, recently releasing the first 27” QD/OLED gaming monitor with a 500 Hz refresh rate (that unusually high refresh rate is particularly attractive to gamers who thrive on being able to see rapid screen movements without lag).  With this new high refresh rate QD/OLED monitor and other recent 27” QD/OLED entries, QD/OLED is expected to increase its share of the 27” OLED monitor market from 32% last year to 47% this year.
While OLED monitors overall are still a small part of the general monitor market, roughly between 1.4 and 1.5m units out of between 150m and 155m, over the last few years, QD/OLED has become the standard bearer for high-end gaming monitors, and their share of the OLED monitor market is expected to increase from 68% last year to 73% this year.  With  only one 30,000 sheet/month QD/OLED fab, SDC can either produce ~700,000 QD/OLED TVs or ~3m+ monitor panels.  With large panel OLED (TV) growth relatively slow and OLED monitor growth increasing, the likely higher per unit profitability on monitors than on TVs, it would seem that QD/OLED has found a new home.  With considerable room for QD/OLED technology improvement that can widen the gap between WOLED and QD/OLED, it seems a more comfortable home than the technology battles that rage between LCD, Mini-LED, QD, and WOLED in the TV space

China’s largest display producer BOE (200725.CH) and Korea’s largest display producer Samsung Display (pvt) are locked in a race to be the first to produce IT OLED panels on Gen 8.6 substrates.  Current production is done on existing Gen 6 OLED production lines, but with expectations that demand for OLED laptops and monitors will continue to increase, and the carrot of Apple’s (AAPL) slow but steady conversion of its mobile products to OLED, the race continues to escalate.  OLED It panels can and are produced by both (and others) on Gen 6 OLED lines, but the number of panels that can be produced on one substrate of Gen 8.6 glass is more than twice the number that can be processed on one Gen 6 substrate, so overall fab efficiency is higher for Gen 8.6.
Of course, the necessity for increasing OLED IT panel production volumes is based on demand, so both Samsung Display and BOE are making the bet that OLED IT volumes will continue to increase, although both are starting production at levels below the stated capacity of the fabs, and both stating that the expansion to full capacity will take place as the market continues to grow.  Some of this open-endedness comes from Apple, who has been thought to be adjusting its OLED transition plans due to weak market conditions, but when making long-term plans (fab equipment has a 5–7-year depreciation term in South Korea and a 7 year term in China) shorter -term factors carry less weight.
So how much does it cost BOE and Samsung Display to build out these new fabs?  SDC has the advantage of being able to reuse fab space that was previously used for large panel LCD production, so no greenfield cost, but lots of modifications for new equipment.  Samsung Display is using Canon (7751.JP) as a source for the deposition tools it is building its fab around, which are estimated to cost ~$400 million each (2 are needed for a 15k line) with another ~$100 million for vacuum chambers and logistical equipment that is tied to these tools, so the key equipment cost alone is over $600 million. 
BOE has selected Sunic Systems (171090.KS) to supply their deposition tools for an expected ~$500 million price tag (inclusive of associated equipment) so BOE will have a cost advantage.  This seems to have lit a fire under Samsung Display to beat BOE in being the first to mass produce IT OLED products on a Gen 8.6 platform, gaining the advantage of experience, a key to improving yield.  In that vein, SDC took delivery of its 1st (of two) Gen 8.6 OLED deposition tools about a year ago and has been refining the process and tool characteristics since the installation was completed.  The 2nd tool is expected to be delivered within the next 2 – 3 months.  SDC has stated that they expect to begin mass production in 2026, however more recently there have been indications that SDC is planning to begin mass production this year, likely putting at least the first (of two) lines about a year to 18 months ahead of BOE.
Again, the risk to both producers is how rapidly the market for OLED IT products develops and how much of that capacity can be produced on existing Gen 6 capacity.  In the table below we look at rough (very) shipments for OLED IT products in 2023 and 2024 and we note that it is estimated that Apple (iPad Pro) was responsible for at least half of the growth in OLED tablet shipments.  Given that there is a considerable amount of global Gen 6 capacity, even another year of strong unit growth could be covered by existing Gen 6 capacity, albeit a bit less efficiently, so the necessity for either SDC or BOE to begin production at these new facilities is less critical.  

​That said, much of the existing Gen 6 OLED capacity is unable (as it stands currently) to produce some of the more esoteric OLED stacks and backplane configurations that Apple seems to desire and are becoming the leading edge in IT OLED production technology, so we have to sub-divide  demand further into ‘advanced’ OLED IT and ‘regular’ OLED IT production, and that is where both SDC and BOE will really compete.  LG Display (LPL), who produces ‘Advanced’ OLED IT products on its Gen 6 OLED lines and has yet to announce plans for a Gen 8.6 OLED IT project, is also a competitor and one that has been qualified as a full-scale producer for Apple using its current Gen 6 fab, so things get even murkier when LG Display is put into the mix.
All in, SDC and BOE will duke it out for leadership in this new Gen 8.6 OLED IT category and will likely not get much out of the results for the first few years, while LG Display has the option of remaining a Gen 6 OLED IT player or stepping up to Gen 8.6 and incurring the risk of taking on a considerable financial burden and hoping that the market can support all three players quickly.  It is good that the industry is progressing in terms of its ability to efficiently produce OLED IT products, but the necessity for immediacy seems a bit harder to understand.  Samsung Display has always been the leader in RGB OLED production and as BOE is the masthead producer for the highly competitive Chinese display industry, neither seems to have much choice that to compete at this point, while LG Display will likely be the only profitable supplier of IT OLED for the next few years without the cost and depreciation of a new fab.  If it’s between 1st or 2nd place and losing money for the next few years and 3rd place and making money now, we go for the bronze.

​Samsung Display (pvt) has committed to OLED in a big way, ending its many years of large panel LCD production.  The company’s OLED focus has made it the leader in RGB panel production for smartphones, but as OLED became dominant in the small panel market SDC realized that it could not maintain it singular dominance in that space as competition from China increased.  To that end, SDC is building RGB Gen 8.6 capacity specifically designed for the production of larger OLED panels for IT products, such as tablets, monitors, and notebooks.  There are a number of manufacturing challenges that make this expansion more than just adding capacity as the deposition equipment has to be specially designed and processes have to be modified to make such a change, but as is typical of SDC, they are willing to take the risk to become the leader.
China’s leading panel producer BOE (200725.CH) understands that while it continues to produce large panel LCD displays, it must compete directly with SDC in this emerging space and has begun construction of its own Gen 8.6 OLED for IT fab and Visionox (002387.CH), a smaller Chinese OLD producer has begun the planning for OLED for IT capacity.  This leaves one major panel producer, LG Display (LPL), with no announced plans for such expansion, despite its close relationship with Apple (AAPL), who is expected to drive OLED IT demand as it transitions its product line to OLED over the next few years.
LG Display already produces OLED for IT panels on a Gen 6 line and was the first producer to develop the tandem display structure that Apple uses for the iPad, but it does this production on a Gen 6 line, which makes it less efficient than a Gen 8.6 line would be.  This has caused considerable speculation about why LG Display has not committed to building a dedicated Gen 8.6 OLED for IT line to compete with rivals SDC and BOE.  Much of the speculation was based on LG Display’s financial situation, which has been strained over the last few quarters, but with the sale of the company’s LCD fab in China, the pressure has lessened, and the assumption has been that LGD would commit to the new fab early this year.
It seems that this will not be the case if a story out of South Korea is correct, as it indicates that LG Display is actually preparing to do just the opposite.  Instead of adding Gen 8.6 OLED capacity, or adding additional Gen 6 OLED for IT capacity, the information suggests that LGD is actually planning to reduce its existing OLED for IT capacity and convert it to additional Gen 6 OLED capacity to produce iPhones.  The motivation for the change would seem to be Apple, who has seen relatively weak demand for the OLED iPad, which has led to lower utilization rates for LGD at its OLED for IT fab.  In response the story says that LGD wants to convert some of its Gen 6 OLED for IT capacity to iPhone capacity, as it expects to increase3 its iPhone production for Apple this year by almost 17%. 
Such a change would not be cheap as the new iPhone OLED line is expected to cost ~$1.36b US, after LGD spent almost $2.6b US to build the Gen 6 OLED for IT line.  It would also indicate that LG Display does not believe that the demand for OLED IT products will grow as quickly as some predict (OLED penetration into the IT market is expected to reach 2.8% this year and 5.2% next year), essentially betting on iPhone growth and its own ability to capture additional iPhone production share from SDC.  Given LGD’s relationship with Apple, and the fact that Apple has likely financed a portion of LGD’s Gen 6 OLED for IT fab construction cost with pre-payments, Apple would have to sign off on the plan, a tacit agreement as to the potential for a weaker demand picture for OLED for IT going forward.
All in, this is a major decision for LG Display if the story is true, and one that LG Display has been unable or unwilling to make while others have committed.  If LGD decides to reduce OLED for IT and that market takes off it will fall far behind its rivals.  If it reduces OLED for IT capacity and OLED IT demand is less than predicted it will have bypassed months or years of low utilization at a very expensive fab.  No pressure…

The rivalry between South Korean panel producers (Samsung Display (pvt) and LG Display (LPL)) and Chinese panel producers has been ongoing for a number of years as Chinese producers have pushed South Korean producers out of the large panel LCD business.  As it became obvious that Chinese producers had the advantage of significant government construction and operating subsidies, South Korean producers began shifting from LCD display production to OLED production, a relatively new technology at the time.  While Chinese large panel producers eventually won the battle for LCD display domination, South Korean producers went on to establish OLED as a higher quality technology, particularly for small panel displays.  Not to be outdone, Chinese panel producers have been building OLED capacity to challenge South Korean dominance in the OLED space, and while there are a multitude of CE brands that use OLED displays, the top of that list is Apple (AAPL).
Apple’s transition from LCD to OLED starting with the iPhone X, released om November 3, 2017, is expected to continue for the next few years as they migrate much of their product line to OLED.  Samsung Display and LG Display have been the primary small panel OLED suppliers to Apple but are continuingly being challenged by China’s largest panel producer BOE (200725.CH), who has made some inroad with Apple, supplying replacement displays for earlier iPhones and as a 3rd supplier for some later models.  While BOE has had its own issues with Apple, they continue to challenge SDC and LGD, along with a number of smaller Chinese OLED producers, and SDC has gone to the US ITC alleging patent infringement, with BOE, and other Chinese OLED producers (Chinastar (pvt), Tianma (000050.CH), and Visionox (002387.CH)) responding by challenging the validity of those patents in US Patent Court.
As the ITC investigation continues (target date 3/17/25) the patent challenges also continue, and the US Patent Review Board has ruled on one of the 4 patents that Samsung claims were infringed upon.  The ‘683’ patent, filed by Samsung Display on 11/13/17 in the US and 3/6/12 in Korea makes 15 claims concerning OLED pixel structure, particularly Samsung’s ‘diamond’ pixel structure shown on the left side of  Figure 1.  The PTAB has decided that 10 of the 15 claims made in the original patent are not valid, while leaving 5 intact.  Samsung will have the opportunity to appeal that decision. 
Limiting the broad scope of a patent is not an unusual outcome in patent review cases, but narrowing the patent will also narrow the ITC’s investigation scope, making SDC’s case a bit harder, and could open one of the other patents included in the investigation to further scrutiny as it is essentially a continuation of the ‘683’ patent mentioned above.
All in, the validity of the ‘shape’ characteristics of the pixels (polygon, Octagon, or non-quadrilateral) as specified in the ‘683’ patent, remain in effect, which is a key point in terms of the infringement, but spacing between pixels, size, and arrangement, the other ‘683’ claims, are invalidated, reducing the points that SDC can cite in the ITC investigation.  We expect SDC will appeal the PTAB decision, but this ruling and any potential appeal will likely push out the final ITC decision and the battle for OLED supremacy will continue in both the consumer space and the courts for another year.  That’s how lawyers put their kids through college.

[Note: The US Patent Office considers a patent unpatentable when the difference between claimed subject matter and prior art would have been obvious at the time of invention by a person having ordinary skill in the art to which subject matter pertains, where ‘ordinary skill’ means a degree in electrical engineering, material science, physics, or similar disciplines, along with 2 years of professional experience working with display design, including OLED displays or an equivalent level of skill, knowledge, or experience.]

​There are many ways to produce OLED displays. Small OLED displays can be produced using a red, green, and blue stripe to produce a pixel that can reproduce millions of colors. Some create small OLED displays by patterning RGB OLED material dots in a variety of configurations, each with its own positives and negatives, but large OLED displays, such as those for TVs or monitors are another story.  LG Display stacks a number of OLED materials on top of each other across the entire TV and uses a color filter to create colored sub-pixels.  Samsung Display does something similar, but uses different OLED materials and then uses quantum dots to convert the light into colors.
While the techniques for creating small and large OLED displays are different, they both have to compete with other display technologies, particularly LCD and its more recent kin, Mini-LED TV.  OLED TVs tend to have richer colors and higher contrast than LCD TVs but they tend to be less bright than LCD TVs, and are more expensive to produce, so large panel OLED producers are always looking for ways to improve brightness.  There are micro-lenses that can be used to pull more light from the display and dozens of other techniques that will work toward improving brightness, but the most important focus for improving large panel OLED display brightness are the emitting materials themselves.
OLED material producers are constantly working to improve characteristics, and while new OLED materials with better characteristics are always being developed, brightness improvements are often a tradeoff against material lifetime or color accuracy and cost, yet the competitive nature of the display business forces OLED display producers to keep making improvements to counter the competition.  One way of doing such is to use more OLED material.  LG Display’s original WOLED displays were formed of three stacks of OLED materials in layers.  Each stack was composed of blue and yellow/green emitters.  That combination produced white light, which was then passed through a color filter of red, green, and blue phosphors, each removing the opposing colors.  The prolem with this method is that it is subtractive and results is considerably less light reaching the viewer.
Over time a red emitter was added to the stacks to improve the quality of the white light, but in order to maintain brightness after the color filter, a blank space is left on the color filter, allowing a white sub-pixel to be added to each pixel.  While this improved the overall brightness, it also washed out some of the colors.  LG Display has now decided to add a fourth stack to its upcoming displays by separating some of the emittercolors in the stacks into there own stacks.  This concept adds additional emitter material, which adds to the light outrput (brightness) and allows for more control over the ‘tuning’ of each layer.
Samsung Display (pvt) has a different method for producing large panel OLED displays.  They coat the entire panel with OLED emitter materials, in the same way LGD does, but the combination of materials produces blue light rather than white light.  The blue light is passed to red and green quantum dots, which shift the blue light to red and green, and  a space allow the blue light to pass through unchanged.  While there is some loss from the qualntum dot conversion, they convert rather than filter, so a white pixel is not needed and the colors tend to be truer.
That said, LCD displays are based on backlights and OLED displays are self-generating, so regardless of the method used, OLED displays tend to be less bright, and driving them harder with a higher current just reduces their lifetime, so Samsung Display is doing the same thing as LG Display and adding an additional stack of blue  light generating OLED material to its QD/OLED displays, starting with its smaller OLED monitors.  Consumers will benefit from the extra stacks from both producers, as will the OLED material suppliers, although the uptake will not be overnight, however the bigger question will be how the additional stack will affect the price of the displays.  OLED emitter materials are expensive so we expect producers will have to eat the cost at the onset, but if the concept of adding stacks makes enough difference that consumers are more comfortable with OLED, than it will be worth the cost.  We expect the answer will take at least a year to surface, and while the idea of adding stacks might seem nuanced to the average user, if it is able to increase the brightness of an OLED display by 20% or 25%, it will make a big difference in the battle between OLED and LCD over time.

We have read a considerable amount of Chinese tech propaganda concerning China’s push into the OLED display space and how, ‘with hard work and an undying devotion to China’s persistence and manufacturing expertise’, they have unseated the South Korean ‘dynasty’ and are poised to take over the OLED space, and while China’s OLED producers have made considerable progress toward becoming major contenders in the OLED display space, there are some points to be made.

• First, no matter who was the market share (units of dollars) in the early days of OLED display production, they faced a loss of share as others began to enter the niche.  With Samsung the leader in the small panel OLED space, especially the small panel flexible OLED space, the company was bound to lose share over time, which has been the case.  If China’s BOE, Visionox (002387.CH), or Tianma, had been the first to market, they would have faced the same fate.
• Second, on a unit volume basis, Samsung is still the leader in terms of unit shipments for small panel flexible OLED displays. In fact in only one quarter over the last 3 ½ years did Samsung’s unit shipment ratio fall below 2x that of the producer in 2nd place. 
• Third, while panel producers that produce both LCD and OLED displays rarely break out segment profitability, we expect there have been only a few instances when Chinese OLED producers were profitable for two consecutive quarters.  Samsung Display (pvt), at least on an operating basis, has been profitable for the last ten quarters, although we note that what remained of Samsung Display’s large panel LCD business likely had a negative effect on the early quarterly numbers and the most recent quarters would be influenced by SDC’s QD/OLED large panel business to a degree.

All in, yes, Samsung Display will continue to face increasing competition in the small panel flexible OLED space but remains the overall leader.  Perhaps in the future, one or more Chinese OLED producers will overtake SDC in terms of unit volume, but we expect it will be some time before any Chinese small panel OLED competitor becomes more profitable than SDC over more than a quarter or so.  With 1 new small panel OLED fab and three large panel OLED fabs under construction in China (one additional fab in planning stage), and 2 large panel OLED fabs under construction in Korea, it will be a race to see who can fill those fabs profitably, especially given the current weak state of demand for CE products, but we doubt SDC will lose its position as the most profitable small panel OLED display producer in the near-term.

The holy grail in the OLED material space is phosphorescent blue emitter material, with the reason being that in current RGB OLED displays (all OLED smartphones and IT devices but not OLED TVs) the OLED stack is comprised of a Red phosphorescent emitter, a green phosphorescent emitter, and a blue fluorescent emitter.  The nuance between phosphorescent and fluorescent is a big one in the OLED material space as broadly, fluorescent materials generate less light per unit of energy than phosphorescent ones.  By converting the blue fluorescent emitter material currently used in most OLED stacks, to a phosphorescent one, the amount of power consumed by the emitter stack could be reduced by ~25%, an important point for mobile devices, and with numerous labs and companies working toward the commercialization of a blue phosphorescent emitter, the long-term stakes are high.
It seems that the average investor believes that when blue phosphorescent emitter material is commercialized, the winner of the race, whoever that might be, is due to see a windfall in terms of OLED material sales, but while we believe that is the case over time, we are less sanguine about an immediate and significant jump in revenue from blue phosphorescent sales, as both physics and marketing must be figured into such equations. 
There are two factors that come into play when planning OLED pixels.  First is the efficiency of the materials, or their ability to convert electrical energy into light, and the 2nd is the eye’s sensitivity to each color.  If we assume the efficiency of both red and green phosphorescent emitter materials is the same (its not), for both colors to look equally bright to the huma eye, the pixel would contain two times the amount of red material to green material, but in practice that ratio is closer to 2 (red) to 3 (green), and again assuming the same efficiency for blue phosphorescent material, the theoretical ratio for blue would be only 16.3% of red, or 33% of green. So if red emitter cost $1,000 per kilogram (arbitrary price), the theoretical cost of a display that used 1 gram of red emitter would be $1.67, consisting of $1.00 of red, $0.50 of green, and $0.17 of blue, remembering that these are theoretical not practical ratios.
Back to reality, just by looking at a common pentile pixel layout, those ratios are not even close, especially as the efficiency of fluorescent blue (currently used) is considerably lower than that of (hopefully) phosphorescent blue, so ‘more’ fluorescent blue is needed currently to make up for that inefficiency, which leads to the idea that if fluorescent blue is replaced by a more efficient phosphorescent blue emitter, wouldn’t that mean that less blue is needed?  If all were of equal efficiency, yes, but that is certainly not the case with OLED materials. 
OLED material developers must find a balance between three major factors.  Color point (such as deep blue, not sky blue), efficiency, the ability to convert energy applied to light, and lifetime, or how long it takes for the material to degrade to a set point.  Finding a true deep blue phosphorescent material is not an impossible task, but finding one that has a reasonable efficiency is much harder, and finding one that is deep blue, with a high efficiency, but does not degrade in a few hours is very difficult, so material scientists continue to wrestle with materials until the right combination is found.  Even at that point however, we don’t know what the efficiency of this new blue phosphorescent material will be, and that will be a determinant in how much blue phosphorescent emitter material is needed to balance existing red and green phosphorescent emitter materials, which will also determine how much blue phosphorescent emitter material an OLED panel producer must buy when incorporating it in a new OLED display, so the variables are truly ‘variable’.
With all of those physical issues, there is another one as important, and that is the manufacturing cost of this new blue material.  Again, in theory, the amount of heavy metal, in this case iridium, needed to produce the increasingly higher energy levels of green and blue emitters, would make a phosphorescent blue emitter more expensive to produce than green or red, and under the assumption that the cost of raw materials for emitters is ~40%, this does represent a bit of an incremental cost, along with a relatively immature manufacturing process and considerable R&D that needs to be amortized, so the price/kg of a blue phosphorescent emitter is going to have to be higher than red or green.
That said, while the cost of a blue phosphorescent emitter material will be higher than that of a fluorescent blue emitter, less will be needed (in theory) unless the efficiency is low, which will make the changeover less onerous from a total OLED stack cost.  However it is important to understand that the adoption of a blue phosphorescent emitter material will not happen overnight, just as the adoption of a green phosphorescent material took time, as shown below.  While we expect the idea of being able to reduce power consumption by 25% or have an OLED display that is brighter than is currently possible, will be an attraction to OLED panel producers, but implementing new OLED materials into existing manufacturing processes takes time and considerable effort, and could affect yield for an extended period of time.  Typically such a change would be implemented on a single line, so once the new materials are proven, they would be expanded across other lines over time.
All in, while it will be exciting to see a commercial blue phosphorescent emitter material to complete the OLED stack, we hesitate to build in the high early expectations that are typical in the OLED space and take a more conservative view of how such a new material will be adopted.  With Universal Display (OLED) expected to have an all-phosphorescent stack commercially available next year, expectations will be high, but we expect adoption to the levels seen for current red and green phosphorescent emitter materials will take some time and investors should be wary of building in high expectations at the onset.