​IDC is out with early predictions for the semiconductor market for 2025, expecting a 16% increase in value this year to $779.8b.  Inside of that number are expectations for 24% growth in the memory market, with DRAM expected to be up 30.2% to $118b, with HBM (High Bandwidth Memory) for AI the driver.  As a contrast, they predict that the smartphone market will grow only 3.3% this year, primarily in 2H as inventory levels are worked down, but the datacenter market will see 23.9% growth, with that jumping to 33.6% if you include the cloud and enterprise markets.
As we have noted previously, Samsung, the leader in the memory market, has been unable to capitalize on that leadership and has been losing ground to competitors, SK Hynix (000660.KS) and Micron (MU) in this very competitive market.  Samsung has had problems with heat and power consumption in its HBM3e 8 and 12-layer products that caused yield issues and qualification delays at Nvidia (NVDA), contributing to the recent weakness, and among the pressures that have lead to Samsung’s recent executive level parings.  The head of Samsung’s memory group made a public apology for the shortfall in 4Q’24, leading one to believe that even more intense pressure continues for Samsung to right the problems in the semiconductor division, and it seems they are taking additional steps toward other issues that might be contributing to the problems with the company’s semiconductor production.
Samsung has been developing a more advanced memory product (D1b) that is based on a 10nm node.  They have been producing D1b memory, which is used in its DDR5 memory products, on a 12nm node since late 2024, which itself was delayed by almost a year.  This node change has raised expectations  about the 10nm product, based on higher density and even higher speeds than the D1b 12nm product.  However it seems that as it continued the development of the 10nm product, Samsung has taken the very unusual step of changing the design of the D1b 12nm product, which has been in production for nearly a year, to improve yield.  This typically means that the production process is also changed, an expensive procedure, with equipment having been ordered in 4Q ’24 (unconfirmed) and production of the D1b memory with the new design scheduled for 2Q or 3Q this year.
This was not a light decision on Samsung’s part, likely based on the need to push ahead of SK Hynix and Micron, both of whom use D1b memory in their HBM product, while Samsung is still using D1a memory in its HBM.  If Samsung is able to meet it goal of producing the new design of D1b memory quickly, without yield issues, they will remain competitive until the D1b 10nm development is completed.  If they face problems with the new design and process, they could lose more ground to their competitors and the idea of a design change mid-stream will be viewed as a mistake.  It’s a big bet, but also indicates the urgency being placed on fixing Samsung’s memory issues and allowing them to capitalize on the strength of the memory business this year, an absolute necessity if they are to remain the leader in the memory space.

​Large TV sets bring visuals closer to life size and therefore make them more realistic, and, as LCD display manufacturing matures, the ability of producers to increase screen size continues to grow.  While the average screen size across the broad spectrum of TV sets is only a bit above 50”, LCD panel manufacturing has advanced quite significantly from the mid-1980’s when 9” – 10” LCD TV screens were the standard and 30” demos were the talk of the industry.  We have now reached a point where consumer TV sets are almost life-size, with the largest LCD (Mini-LED/Quantum Dot) TV being 115” on the diagonal[1] , the TCL (000100.CH) 115X955.  This 216 lb. behemoth stands 56.4” high, 101” wide and 2.2” thick, with a screen area of 5,651 in2, enough room to fit 345 iPhone 16’s or four 55” TVs within its confines, with a little room left over.  In human terms, the set’s height is roughly that of a 10-year-old child.
Unfortunately, the production of such a large display is extremely inefficient, utilizing only 62% of a Gen 8.6 substrate and 41% of a Gen 10 substrate, although multi-modal fabs, those that are able to cut more than one size panel per sheet, would be more efficient. Yield is also a big issue, as the sunk cost of a defective panel of this size, even at an early stage in the production process, is extremely high.  That said, this TV set has 20,736 zones in its backlight, allowing precise backlight control for every 0.27 in2 of screen area, along with all the bells and whistles that one would expect in a high-end TV.
This all comes at the exceptionally low price of only $20,000 (or 24 easy payments of $833.34 if you make the purchase with your new Best Buy (BBY)/Visa (V) credit card), unless you are one of those who only wants the latest technology.  In that case there is the Samsung (005930.KS) 114” Micro-LED TV, but that will set you back a mere $150,000 (those 24 easy payments will now be $6,250 each), although both sets are 2024 models if that matters to you.  The real issue here is that if you are willing to accept a slightly smaller TV set size (98” to 100”) and a direct lit (No Mini-LED but with Quantum Dots) backlight, you can grab the Hisense (600060.CH) (100QD7N) 100” TV for $2,000, and if you are willing to go down to 98”, you can save another $200 with the TCL 98Q651G for $1,800.  
So while there is still a very big premium for the top of the TV set size triangle, the fact that the competition between the four LCD panel producers that are currently producing LCD panels 98” or larger is extremely intense, as is the competition between TV set brands for high-end customers, causing the price of these very large TVs to continue to decline.  If one times their purchase around Black Friday or after new model announcements, you too can be the talk of the neighborhood.  Your kids will be popular, you will have friends dropping by every time there is a big game, and only a few of the old-timers will say, “Ah, who needs it?  We had a 10” set in the 50s and we loved it!”


[1] There are larger modular Micro-LED sets but they tend to be custom built.

​Samsung Electronics (005930.KS) relies on its DS division (Semiconductors) to generate operating margins that offset the lower (10% or less) margins of its DX division (Phones, Networks, TVs), despite the fact that DX generates ~60% of the company’s sales, against DS’s 37% to 43% of sales.  When the DS division is operating correctly, as it did for most of 2022, it can generate ~30% of company sales but with an operating margin between 22% and 35%.  Unfortunately, the semiconductor business has not been nearly as good for Samsung as it has been for those not as highly focused on the memory market, and based on Samsung’s just released guidance for 4Q, things actually got worse rather than better in 4Q.
Samsung guided the 4th quarter to 75 trillion won ($51.4b US), down 5.1% q/q but up 10.7% y/y.  This is 3.2% below consensus.  Operating profit guidance was worse at 6.5 trillion won ($4.5b US), down 29.2% q/q but still up 130.5% y/y, pointing out how bad things were a year ago.  Operating margin will come in at ~8.7%, against 11.6% last quarter and 4.2% a year ago, but the guidance for operating income was 27.5% below consensus.  Samsung does not give detail as to the divisional breakdown until its call later this month, but it is thought that the delay in getting its High Bandwidth Memory (HBM3E) qualified at Nvidia (NVDA) as the reason, although we, as did others, thought that the semi division would have done a bit better, even with the delay.  Not a good start for 4Q in the CE space.
That said, LG Electronics also gave 4Q guidance, and while sales were 22.78 trillion won ($15.6b US) which is fractionally up q/q and in line with consensus, operating profit, at 146.1 billion won ($100.4m US), far lower than the consensus of 447.9 billion won ($307.2m US) and over 50% lower than last year’s 4Q.  LG also does not give details but did indicate that the rise in shipping costs and one-time costs associated with the company’s treasury stock retirement program, along with global economic uncertainties, all contributed to the shortfall.  On the positive side LG’s home appliance segment was the biggest contributor to sales and operating profit.

​Recently we noted that Samsung (005930.KS) was one of the only major CE manufacturer that does not offer Dolby (DLB) Vision™ across its TV line, instead developing its own HDR 10+ high-definition video format in conjunction with 20th Century Fox (DID) and Warner (WBD).   These systems increase image brightness and contrast relative to SDR (Standard Definition), along with increasing the color palette, and adjust image parameters on a frame-by-frame basis, rather than fixing a group of settings for the entire content duration, as is the case in SDR.  What makes the Samsung and Dolby systems different is that Dolby Vision has to be licensed by the content creator (typically a one-time fee) and by the device manufacturer (typically a per unit fee), while the Samsung system is open source and therefore free to use.
It seems that Samsung is taking this concept further and has just announced that it will be including Eclipsa™, its open-source spatial audio system, across its entire TV line in 2025.  This system is in direct competition to Dolby’s Atmos™ spatial audio system and similar ones from DTS (DTSI), Sony (SNE) and others, including Apple (AAPL), although Apple’s Spatial Audio is primarily used in its own products as it is closely tied to the OS. 
These audio formats are object oriented, meaning that they isolate each sound, whether it is a voice, music, thunder, gunshot, etc. and allow it to be placed in a three-dimensional space, as opposed to the left/right two-dimensional space used in stereo recordings.  By adding the dimensions of ‘height’ and depth to the audio, a more realistic portrayal of the sounds can be created.  In a typical stereo (2 channel) playback system the sounds are placed horizontally between a left and a right speaker at the time of mixing, or can be mixed in a  ‘surround’ format, typically adding a set of rear left and right channels.  Systems such as Atmos or Eclipsa take that information and make each sound into an object by sampling the audio 48,000 times each second and breaking the audio into objects rather than forcing them into two or four channels.  The systems can then place each object anywhere left/right, front/back, and above/below, creating a more realistic 3-dimensional playback that more closely matches the screen.
These systems typically use speaker systems that include the usual left and right front (and a center speaker as most dialogue originates from center stage), a pair (L & R) of rear speakers, and a height speaker, but they also have to be able to be used on generic stereo systems, such as the TVs own two speakers or headphones. In order to do this, these systems use a number of tricks to fool the human brain.  Delaying (Milliseconds) some objects in one speaker can make it seem like it is further ‘back’ on one side than the other and reducing the volume of an object can have a similar effect, while filtering (changing the tone) of an object can seem to move its location, but the full effect of object-oriented audio is found on the type of speaker set-up described above.
Samsung’s Eclipsa system is an outgrowth of IAMF (Immersive Audio Model & Formats), an audio format it has been developing with Google (GOOG) since 2020 to improve on the ability of other object-oriented audio systems, particularly when used on 2 speaker systems.  At least that is the stated objective, but the fact that Dolby (and others) charge a license fee to use their systems seems to be a big factor, with Samsung unwilling to pay to license such systems when it believes it can produce its own. 
However, while 3D audio market statistics are few and far between, we believe Dolby has had the dominant share and the only way a new competitor can make any headway in said market would be with an open source, and therefore free offering, which is the route Samsung has taken.  Of course Samsung will offer the system across its own TV set lines but will have to convince other CE brands that it can do at least what Atmos can do, without the fees.  Industry organizations, particularly the Alliance for Open Media, have been advocating for royalty free codecs for almost 10 years but has focused primarily on video codecs so Samsung and Google, both AOM Steering Committee members, must get the ball rolling. 
Should their members get behind the Samsung/Google IAMF framework, it would stand as a direct competitor to Dolby Atmos, and since the Alliance for Open Media has participated in the development of IAMF, there is such a possibility.  That said, we note that it is ultimately up to content creators to decide what format they  wish to use, so it will take more than sponsorship from the AOM steering committee members or rank-and file supporters before real adoption is afforded to the new system, but the good news is that it is free, making it available to hardware and software manufacturers, who will not have to pay to build encoders and for CE brands to build decoders into their products, as Samsung is doing.  Its hard to battle an incumbent as entrenched as Dolby, but ‘free’ usually helps.

​While not officially confirmed by the South Korean government, it has been said that the US has granted Samsung Electronics (005930.KS) and SK Hynix (000660.KS) a one-year extension to the US export rules on semiconductor equipment that were put into effect last October.  The rule, which would have tacitly included fabs situated in China but owned and run by both South Korean companies, would have prevented both from expanding or upgrading existing facilities, making them non-competitive with Japanese, Taiwanese, and other Chinese fabs that might find local sources for certain equipment.  We expect official announcements will be made once the current grace period ends at the end of September.

Write this down, 98Q80C.  It is the model number of Samsung’s (005930.KS) ‘almost’ released 98” Mini-LED/Quantum Dot 4K TV.  This monster (~4’ high x 7’ wide – you can fit a bit over three 55” TVs in that space!) includes all sorts of technology to enhance the picture regardless of what you might be watching and has sound object tracking that places sounds where they were positioned in the image, using Dolby (DLB) Atmos (hopefully you have the front, left, right, center, and to overhead speakers that Dolby requires).  But what really makes the 98Q80C unusual is the price.
When the 1st Samsung 98” Mini-LED/QD 8K set came out, it sold (in Korea) for $58,450 and the 4K equivalent sold for $35,160.  Last year the 98” 4K set sold (US) for $15,000, but this year, at least for the next 2 days and 18 hours, you can pick up this 28.5 ft2 baby for a mere $7,999…but wait, there’s more!  If you beat the deadline (pre-orders), Samsung will take off $1,000, bringing the price down to $6,999, and if you place the order at one of Samsung’s participating retailers, such as Best Buy (BBY), they will take another $500 off.  Along with the discounts, you get (hurry, only 2 days left!) a free, yes free, Q800C Soundbar ($1,000 value according to Samsung), free, yes free, installation ($120 value), and 0% financing with $0 down, plus Samsung’s Care+ extended coverage (value of $249.99 for this set for 1 year).
But seriously folks, Samsung is pushing this set, at least for the next 2 days, to build its presence in the 80+” TV market, which is expected to grow 24% this year, despite weak overall TV shipments and sales.  Samsung has the #1 position in this ultra-large market (40%+), and while the 80+” market is small in terms of unit volume (~2.8m units this year), the sales dollars and margins make it quite lucrative, even with the perks above.  We are not saying to dip into the kids’ education funds or take out payday loans, but if you were thinking about filling your living room wall with a 98” TV, strike while the iron is hot, the clock is ticking!
►Don’t forget that our TV pricing data suggests that while there might be price peaks and valleys for every TV set, the general trend is down as the number of days from release increases.  If you need it now, take advantage of this early discount.  If you are not in a hurry, new model pricing is typically the highest over the life of the Tv model.

Legal Mumbo-Jumbo - Note: We have absolutely no vested interest in Samsung or any other company mentioned and receive no compensation from any company for mentioning their name or product.  We mention specific models and pricing only as reference and make no judgement on the value of such purchases to consumers.  
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Years ago we saw a mock-up of an OLED device that looked like a large pen.  It had a tab that allowed the user to pull out a flexible OLED display that showed full color images and text, as if you were reading a magazine or newspaper., which you could wirelessly update or switch pages with the press of a button.  As one who has spent many hours on trains commuting to and from work, the idea of such a device remained a futuristic but eminently achievable industry goal in our minds, and we have followed the display space closely ever since. 
It seems that we are getting ever closer to that dream as Samsung Display (pvt) promises to show an updated version of their flexible and rollable displays at the upcoming SID show next week.  The product is called Rollable Flex, and while it is similar to other SDC display products, and those of other display manufacturers, it takes the rollable concept a bit further.  Typically rollable displays are able to expand their surface area by 3x by maintaining a wide circumference around a drum, or in some cases folding across the interior of a device, however the folks at SDC have come up with a display that is able to be more tightly ‘wound’ around a cylinder without damage, and is able to expand its surface area by 5x, with the show demo being 49mm (1.9”) long when rolled to 254.4mm (10.01”) long when unrolled by wrapping it tightly around a cylinder.
While rollable OLED displays exist currently, they do not have the physical characteristics to be tightly wound without showing stress and eventual more serious damage.  While all of the materials in an OLED stack have their own ‘modulus of elasticity’, a fancy way of saying its resistance to being deformed, much of an OLED display’s flexibility is not determined by its substrate but by the material used to create the OLED stack’s anode.  The anode must be transparent if the light from the OLED emitters is to exit the pixel, and the most common material for OLED anodes is ITO, or indium Tin Oxide, which it typically sputtered[1] onto the substrate.  ITO is unusual in that it has both high electrical conductivity and optical transparency, a rare combination, along with ability to be finely etched, however the material is also brittle, the antithesis of what is needed for rollable displays, and is also permeable enough to allow oxygen and water vapor into the OLED stack, which destroys OLED materials.
In rigid OLED displays, the ITO is deposited on glass, and with a second ‘base’ glass substrate, locks the ITO and other OLED materials away from oxygen and water, however rollable displays must be built on flexible substrates which leaves the ITO and other material open to damage.  The solution for this issue is ‘layer’ other impermeable but transparent materials over the ITO, a process called encapsulation, solving the contamination issue.  That said, ITO’s brittleness is still an issue, and we expect SDC has come up with either an ITO substitute or modified ITO mixture that allows the material to have a higher elasticity modulus that exceeds that of current materials, and the odds are that SDC will not reveal the details of the difference from ‘normal’ and less flexible OLED stack components.
While this is all technical, it does pave the way for progressively smaller rollable devices and puts into sight the one-day pocket pen that opens into a large, full color display.  Samsung has already patented a number of ‘hybrid’ devices that use a rolled OLED display and a mechanical pull-out frame that holds the display when open, but these are typically the size of smartphones when closed, still a reach from the pocket-pen newspaper.


[1] Sputtering is a process  that involves the creation of plasma that ionizes the mater5ial (source) which forces the molecules out of the source  and on to a target material as a thin film.

We have mentioned a number of times that over the last few quarters Samsung Electronics (005930.KS) and LG Display (LPL) have been negotiating over a panel supply deal for OLED displays.  Samsung, whose display affiliate Samsung Display (pvt) has exited the LCD TV panel business, has been looking to expand its premium TV offerings, and while it offers its own Quantum Dot/OLED TVs, production is limited to one 30K fab, leaving Micro-LED TVs at the top of the line, albeit far out of reach for almost all consumers, the company’s Mini-LED/Quantum Dot lines, a small QD/OLED line, and Samsung’s Quantum Dot only LCD TVs.  With the premium Tv market the only TV segment expected to show positive y/y growth this year, building out that segment is quite important currently and likely necessary for the next few years.

While the definition of ‘premium’ in the Tv market varies, we define the ‘premium’ TV market as sets that are 55” or larger and cost $1,000 or more, and the lines shown in the graphic above all fall into that category, with a few models just below the ‘premium’ cut as shown in the table below.  As the Micro-LED line is not really a consumer-friendly priced item. We would expect Samsung, if a deal were concluded, to insert the ‘New OLED’ line at the same price points as the QD/OLED line to increase the volume of OLED offerings at those price points, and consequently, those price points are roughly equal to LG’s (066570.KS) own G3 OLED TV line, so price competition between the two rivals would not create further friction.
The big question however is Samsung’s margins on the new OLED line, much of which would be determined by the agreed-on price for the panels, which was said to be the contention throughout the earlier negotiations.  As Samsung is expected to purchase ~2m units next year, increasing to 3m and 5m in the following years (unconfirmed), and perhaps up to 1m panels this year, they are looking for a substantial discount to LGD’s normal transfer price.  LG Display has been running its WOLED fabs at less than full utilization so far this year, and such a deal would give a needed boost to OLED utilization rates that have dragged down profitability in recent quarters.  However rumors that Samsung is demanding prices below those offered to LG Display’s parent, which would likely cause a bit of bad blood between parent and affiliate.  That said, LG owns almost 60% of LG Display, so it’s an odd situation for LG.
While news services have picked up the supposed ‘movement’ in the negotiations, this would not be the first time a ‘deal done’ signal was given (or assumed) from local South Korean media.  While such a deal will have benefits for both parties, there is considerable emotional skin in the game for Samsung, who decided in 2013 that producing large RGB OLED panels was not a viable process.  In fact, they were correct in that assumption, as LG Display does not use and RGB patterning process in its OLED panels, but one encompassing creating a white light with a combination of OLED emitters and using a color filter to create the necessary red, green and blue sub-pixels., which reduces the brightness of the display.  Over the years LGD has adopted a number of improvements that have offset some of that issue, but the current-day management at Samsung must bow to the fact that the 2013 decision has given LGD a distinct advantage in the OLED TV space, as both the sole OLED TV panel supplier and LG’s over 50% share of the OLED TV set market.
It will be challenging for Samsung to come up with a marketing plan that continues to sell its QD/OLED technology while extoling the virtues of LG Display’s OLED TV panel vision, and not degrading the company’s Mini-LED/QD technology, which Samsung has been championing since 2021.  Of course that is what the marketing guys get paid for, so we expect rounds of advertisements providing little empirical information about the pluses and minuses of each technology, and more on why whatever the technology is, Samsung’s is better than others.  Samsung’s smartphone and TV divisions were ‘ordered’ to find solutions to improve earnings after 1Q results led to an 18% decline in sales and the lowest operating profit the company has seen in many years.  Tv division sales were down 14.8% y/y, so there is considerable pressure to expand the premium set business and bring up margins from upper management, so likely less face saving, and more sales will be the holiday mantra this year.