3D TVs had their day, becoming commercialized in 2010 and peaking in 2012, but by 2016 the production of 3D TVs had ended.  With no real standardization and an audience in which ~12% could not watch such images without complications and ~30% were unable to fully visualize 3D images, the concept, which in most cases involved the wearing of 3D ‘decoding’ glasses, was considered a fad, despite the success of a number of movies that were shot in 3D.   Another unusual display technology, stretchable displays, has been on the mind of a number of OLED display producers, particularly Samsung Display (pvt), who has shown such at exhibitions over the last few years.   We never could quite understand the attraction for stretchable displays, as the applications were quite limited, but from the standpoint of being able to actually produce such a display, it was a technical accomplishment.
Now SDC has taken both technologies and combined them to create what might be called, for lack of a better name, a stretchable 3D display.  It’s not exactly a 3D display, but if you watch the demo, you can see that the display moves (stretches) in accordance with the content, which in this case is flowing lava.  While watching a TV made with such material might not have the depth that actual 3D technology might have, the fact that the screen could ‘flow’ with the content might be a legitimate application for stretchable display technology.  In this case the demo was made using a 13” panel, so a real commercial product is still far away, but at least it begins to justify all the R&D that has gone into stretchable displays; sort of…
https://youtu.be/kg2Izr6krY0
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​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.
 

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.

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…

​Last week we noted that Samsung Display has been considering adapting an idle Gen 8.5 LCD fab to the production of OLED displays.  While little has changed on an absolute basis, meaning SDC has not made any comments or decisions regarding such a conversion, but in our 08/02/21 note, we mentioned that Samsung and tool vendor Ulvac (6728.JP) had been developing a deposition system that would allow SDC to produce RGB OLED displays on a Gen 8.5 platform, a process that required the use of fine metal masks that were unable to scale above 6.  The tool, which is currently under evaluation by SDC, has a vertical deposition chamber, which eliminates the fine metal mask sagging issue that occurs when the deposition chamber is horizontal.
However, the SDC supply chain also seems to have caught the Gen 8 OLED fever as local tool vendors are said to be developing dry etchers that will be used during the TFT process, should it move forward over the next few months, with Wonik (240810.KS), and ICD (040910.KS), both local suppliers and Tokyo Electron (8035.JP) are all competing for such a potential order.  Dai Nippon Printing (7912.JP) is said to be developing the Gen 8.5 fine metal masks and Hims (238490.KS) is developing the tensioning frame for the masks.
What makes this a high risk game for all of these suppliers is the fact that Samsung Display has yet to make a final decision on whether to move the project forward, with the financial burden of the development costs resting on these potential suppliers.  If SDC does not qualify the Ulvac deposition tool, or at least allow it to move to the next stage of development, it could postpone or end the program, as the deposition tool modification program is the most important part of SDC’s potential for producing larger RGB OLED panels.  SDC and parent Samsung Electronics have rejected the concept of WOLED (White OLED), which is used by LG Display to produce its OLED TVs because it is not an RGB process and uses a color filter.  SDC has been very successful in producing small panel RGB displays, and is the global leader, but because of size limitations of the fine metal masks, it could not be scaled above Gen 6.  If successful with the new deposition process, SDC will be able to produce both OLED IT panels and potentially OLED TV panels under the process, which would have a marked impact on the OLED market.
There are a lot of ‘ifs’ here, and significant risk being taken by tool vendors, but if successful could lead to another Samsung Display equipment cycle that would broaden the OLED market and give SDC an alternative to the development of new technologies, such as QD/OLED or Micro-LEDs.  While we expect a final decision before the end of this year, the timeline for this type of project is still convoluted and open to speculation, but we expect that these tool vendors have been in discussions with SDC about the potential for the project’s implementation and have taken the R&D costs under the encouragement of SDC.  It’s a risky business, you’ve got to be in it to win it.

​At the request of parent Samsung Electronics, display affiliate Samsung Display (pvt) has been developing an LTPS backplane designed for mini-LED displays.  Samsung Electronics has been offering a line of 8K and 4K mini-LED TVs and plans to expand their offerings later this year with larger size offerings up to 98”.  The backplane for such large mini-LED TVs has been built on PCB circuit boards but as Samsung Electronics is also developing smaller mini-LED models where the mini-LEDs are packed more closely together, mounting on PCB boards using typical production methodology limits the LED density.  Since the number of mini-LEDs in a 4K display is over 24m, and each is driven by its own circuitry, it becomes necessary to use thin-film technology as mini-LED display sizes get smaller.
SDC is expected to produce these TFT backplanes at it Gen 4 line in Cheonan, Korea, where it had previously produced rigid OLED panels.  That production has been moved to its A2 Gen 6 line, which is more efficient, leaving A1 in question as to usage.  As we noted last week (see our note 07/09/21) Samsung Display has been shifting production as it expands its OLED notebook line and offers production of same to outside customers, and has been toying with the idea of closing A1, which is its oldest OLED fab (2007).  While we expect, if the project (code name “M-Project”) is successful, at least a portion of the A1 capacity will be put into use, and using the existing Gen 4 equipment, the lines would be able to produce the 9.7” mini-LED modules that Samsung Electronics assembles into larger mini-LED backlights. 
Given that micro-LED TFT circuitry is more complex that of standard backlights, Samsung Display will have to change the process for TFT production, including increasing the number of mask steps, but by using SDC Samsung Electronics is better able to tailor the supply of mini-LED modules to its own sales targets and production.  Originally Samsung had been negotiation with Taiwan based AU Optronics (AUOTY), but decided that it could not have the same level of control under an agreement with AUO.  According to Korean press, at the time Samsung Electronics made the request to SDC (the SDC team was formed in April), Samsung Electronics also informed SDC that it was becoming more open to SDC’s QD/OLED project, which had been seen as questionable in Samsung’s eyes earlier.  This likely has encouraged SDC to work toward Samsung’s mini-LED TFT production request as it gives SDC some encouragement that parent Samsung will be a major customer of the new technology.  Funny how that works…

​Samsung Display (pvt) made a momentous decision in March of last year.  The company decided to end production of LCD large panel displays by the end of 2020.  This was at a time when LCD large panel prices had declined 27.4% in the previous year, and while there was a slight bounce in large panel pricing early in 2020, SDC was facing continued pressure from Chinese panel producers who were able to provide lower priced panels using government subsidies and had a goal of becoming the global leader in LCD large panel production regardless of the cost.  With COVID-19 also entering the decision process, SDC began its program of closing large panel LCD fabs in Korea, selling it large panel LCD fab in China, and converting some of that LCD capacity to small panel OLED, where the company dominates the industry.
This decision also put Samsung Display in the position of having less of an impact on parent Samsung Electronics, who was forced to source from other panel producers.  At the time of the announcement this change had a positive spin for Samsung Electronics in that it was a buyer’s market for large panels and Samsung would not be burdened by SDC’s losses in the large panel business if panel prices declined further.  Samsung Display however realized that it needed a large panel product to maintain its relationships with both its parent and other large panel customers and began a track toward the commercialization of a new technology that combined OLED and quantum dots.
The technology was based on a layer of blue OLED emitter material essentially covered with a color filter made of red and green quantum dots.  This was not the same as the color filter used by the WOLED process championed by LG Display, which combines green/yellow and blue OLED emitters, forming a white light and then uses a color filter to remove 2 of the three colors from each sub-pixel with phosphors.  In the original SDC QD/OLED model the two OLED emitters were replaced by a single blue OLED emitter and the color filter phosphors were replaced by quantum dots that shifted the blue light to red and green rather than filter out much of the light which should lead to a brighter display.
Unfortunately the only blue OLED emitter commercially available is a fluorescent material, rather than a phosphorescent one, with fluorescent materials producing far less light than phosphorescents.  As the goal of the SDC project was to develop a brighter display, using a fluorescent blue emitter did not produce the desired results and SDC has been evaluating an alternative known as nanorods.  Nanorods are small structures that are ‘grown’ using the same materials used for LEDs, and as the direction of the growth can be controlled, these structures are grown as rods, which are bunched together to form a light source, in this case a blue one.  Using the same quantum dot color converters, an RGB pixel can be created by converting the blue light to red and green and allowing some of the blue to show through in each pixel.  While that sounds relatively simple, getting the nanorods, which are less than 1um wide to stand up next to each other is a bit like herding cats, they tend to go in every direction, so Samsung is using a process called dielectrophoresis, similar to the process used to separate platelets from whole blood, which aligns the rods by using an electric field.  The process lines up the rods vertically, which represents a major step toward the commercialization of the process.

​But there is still one step necessary before SDC is able to produce a true quantum dot nanorod display and that is to regulate the number of nanorods in each pixel.  Since each nanorod is an emitter, if one pixel has more rods than another, the one with the larger number will be brighter and uniformity across the display will suffer.  As this is among the most critical of metrics and a big factor in yield and therefore viability as a commercial product, it is of critical importance, and as the nanorods are deposited on the substrate in an ink, controlling their numbers is quite difficult.  That said Samsung has developed a method to control nanorod pixel density and to further insure that the display is uniform, they have also developed an algorithm that can adjust a pixel’s luminosity to the norm even if it has too many nanorods.
Does this mean Samsung Display is ready to produce QD/NANO displays?  Almost, according to UBI Research, who has analyzed 160 Samsung Display patents relating to QNED.  They have come to the conclusion that SDC just needs to refine those processes and make sure such devices can be considered for mass production at a profitable price point.  As we have noted previously, SDC has been delivering samples of the technology to its parent and potential customers, so it seems they have progressed considerably from where they were toward the end of last year, but their goal of delivering a display product using QD/OLED or QD/Nano by the end of the year is still iffy.  That said, it seems they are getting close.

​Last May Lee Jae-yong, the Vice-Chairman and heir to Samsung Electronics, made a public apology concerning the ‘irregularities’ surrounding his inheritance of managerial rights at Samsung Group (pvt) and its policy of suppressing labor unions.  In that speech he promised to abide by the law and stated that “there’s no more controversy about the issue of management succession.” On the topic of Samsung’s intolerance of labor unions, Lee said, “The culture of labor-management relations at Samsung has failed to keep up with the changing times. I will ensure that the phrase ‘no union management’ is no longer used at Samsung,” but in January of this year he was sentenced to finish a 2.5 year term in prison for bribery, and currently resides at the Seoul Detention Center.
While the promises he made before his sentencing were likely carefully screened by Samsung’s legal department and worded as vaguely as possible, Samsung Display (pvt), the company’s display production affiliate, allowed the formation of a union in February 2020, which now has ~2,400 members, or ~13% of the affiliates workforce.  Unfortunately, things have not been going smoothly concerning talks between the union and company management, and a disagreement on the 6.8% wage increase the union has asked for and the company’s 4.5% increase proposal has not been resolved, along with an increase in hazardous duty pay, which has been frozen for 10 years.  Workers received a 2.5% increase last year and a 3.5% increase in 2019.
As these negotiations are the subject of close scrutiny, the outcome could set the tone for union formation and negotiations at other Samsung affiliates, particularly while Lee remains in prison.   The compliance committee that was set up as part of a court order forcing the company to abide by labor laws, is facing considerable pressure to resolve the situation, however union members rejected the company’s proposal and a subsequent vote by union members decided by a 91% positive vote, to take collective action against Samsung Display management.  The union is planning a strike for June 21. 
While strikes are usually ugly affairs with shouting mobs and nasty placards, this strike will be a bit different, starting with six union members and increasing gradually, as this would be the first union strike at a Samsung affiliate, but the union did suspend mediation after deciding that the differences between the two parties were too difficult to resolve, opening the way for the walkout.  SDC managers have kindly given the union a list of the minimum number of workers needed to keep the fab in operation, although it seems that it might take some time for the union to build to anywhere near that point, a rather polite but somewhat superior gesture . 
Given the relatively low level of initial union involvement, at least as of June 21, we expect little impact on SDC’s production, however should the walkout expand and be sustained, it could put more stress on what is a relatively tight display market currently.  As large SDC customers such as Apple and Samsung itself would not have time to requalify new producers or evaluate sample products, an expanded or extended strike could present an issue for release dates, but thus far, while the situation is far more volatile than it might have been in the past when Samsung management was able to squelch any worker disagreements, it still seems quite staid and civilized compared to strike at other companies in Asia and certainly more polite than those seen in the US.

Back on 2/27/17 we noted that Samsung Electronics (005930.KS) had verified that it would release a new Galaxy Tab S3 at Mobile World Congress, returning its tablet business to OLED displays.  Samsung had used an OLED display in its Tab s (7/2014) and Tab S2 (9/2015), but returned to LCD technology for the Tab A (3/2016) and Tab E (1/2016).  We believe Samsung Display (pvt) will be sticking with OLED displays for new tablet models and is considering using OLED for some laptop production this year.

We believe Samsung Display will be converting at least a portion of its L6 LCD production line from a-Si[1] to Oxide[2] backplane production and OLED display lines.  The L6 fab had a raw capacity of 268,125 m2 as of November 2016, which represented 7.5% of Samsung Display’s overall capacity, and 1.3% of worldwide capacity, and we believe had begun to reduce production on at least one of the three L6 lines at the end of last year.  We expect that line to be closed by May and the conversion to Oxide and OLED to begin.  We expect phase 1 of the oxide conversion to be fully ramped by April/May 2018, with lower output levels beginning this summer, and the ramp down of L6 phase 2 starting in July of this year, completed by year-end, and the conversion of L6 phase 2 to be completed by July/August 2018.  The L6 phase 3 ramp down will begin at the end of this year, with the conversion completed by 1Q 2019.

Samsung Display has yet to signal whether the L6 conversion will change the substrate size from Gen 5, so we build the changes into our model using a Gen 5 format.  As the upgraded fab will be supplying both IGZO backplanes and OLED displays, we expect the actual OLED capacity to be considerably lower than what the fab had been producing for LCDs.  We believe that Samsung will shift its LCD tablet and notebook production to its L8 Gen 5.5 lines, albeit at a reduced rate, as it continues to supply Apple (AAPL) with panels for the iPad, along with Sharp (6753.JP) and LG Display (LPL).

While expectations are that Samsung will release the previously mentioned Galaxy Tab S3 this month, there have been rumors that they will also release a Win 10 tablet line this year, although that remains unconfirmed, and we believe has supplied OLED displays to HP (HPE) and Lenovo (992.HK) for their Spectre  and Yoga Thinkpad laptops.  But the laptop market is far different than the smartphone market, and the necessity for OLED displays is less urgent than for smartphones, where the device is on for a large portion of the day.  That said, there was little OLED capacity for laptop display sizes, and yields were lower than those for smartphones, so Samsung Display had less of an incentive to expand that segment.  So what makes Samsung Display willing to step up its ‘non-smartphone’ OLED production capacity?  Most likely it is interest from Apple for its iPad line, and while an immediate move to OLED would be somewhat premature, Samsung Display could be responding to both its parent company’s demand and the potential for Apple to move to at least an OLED iPad variant sometime in the future.  Apple will be announcing new iPads at a press event in April.

All in, Samsung Display and parent Samsung Electronics, continue to push OLED displays further into their mobile lines, and reduce their exposure to LCD in small panel devices.  If we are correct in our assumptions about the L6 conversion, Samsung Display should be able to produce the equivalent of 2.6m 13.5” OLED laptop screens/quarter at the completely converted facility[3].  Apple has been averaging about 11.5m iPad units/quarter for the last two years, so we have to assume that only a portion of the iPad line could be converted to OLED over the next few years, as Samsung Display will also use the new capacity for its captive customer, but even the possibility that Apple might use OLED for its iPad line keeps a fire burning under the OLED space, and will continue to drive Samsung Display and others to add capacity.



[1] A-Si – amorphous silicon – commonly used as an LCD backplane
[2] Indium Gallium Zinc Oxide – aka ‘Oxide’ – another type of backplane
[3] 100% yield – Actual rates will be lower