As we have noted previously the India smartphone market is the 2nd largest globally and represents a large opportunity for smartphone vendors who are able to understand the nuances of this vast country.  That said, India’s GNI (2020) was $1,900/capita, which compares with $64,140 in the US, $10,550 in China, $116,440 in Liechtenstein (the highest), $230 in Burundi (the lowest), and $11,077 for the world combined.  In order to cater to the entire Indian population, aside from flagship models, smartphone brands must pack many features into low and mid-priced phones, something Chinese brands are quite good at, and if we look at the top 10 best-selling smartphones in the country, as shown in Table 1, we can see that all but one are under $300 and two of the lowest priced models are among the top 3 sellers.

​We have mentioned Samsung’s continuing foray in commercializing Micro-LED TVs, with the most recent innovation being the impending release of their 110” Micro-LED based TV to Chinese residents.  The promotion is being done through JD.com (JD) with the device officially offered on June 18.  Despite the price of $156,145 US (1,049,999 yuan) more than 1,500 folks have signed up for an appointment to see the set, which has 4K UHD resolution, a 120Hz refresh rate, supports HDR10+ and has a peak brightness of 2,000 nits (more likely ~1,600), which is about twice that of other types of high-end TVs and far brighter than typical sets which are ~300 nits.  

In the US (2020) Christmas is the biggest spending holiday, generating ~84% of yearly retail sales, with Labor Day a distant 2nd at 3.66%, but that does not preclude retailers from offering financial inducements to encourage shoppers during lesser holidays, especially when demand has been weak in previous months and inventories are high.  With Memorial Day coming up on Monday, retailers, both brick & mortar and on-line, are beginning to offer discounts to grab some attention and stimulate CE sales.  We went back to Samsung’s (005930.KS) Mini-LED/QD TV line to see if there have been significant price changes in both the older 2021 line and the new 2022 line.
For reference Samsung introduced its 8K/4K Mini-LED/Quantum Dot TV line in May of last year, offering two categories of 8K Mini-LED/QD TVs, two categories of Mini-LED/QD 4K TVs, and three lines of Quantum Dot only TVs, for a total of 35 different models.  This year they updated those lines and brought the model count down to 33, eliminating some models that had very similar features, but continued to sell much of the 2021 line along with the newer 2022 models.
 As we have been collecting pricing data on the 2021 line since its release, the latest round of discounts has now brought the price of last year’s Mini-LED/QD and QD only line down from 29.2% early this month (from original price last May) to down 34.2% currently, although only 24 of the 35 models were at their lowest price point, down from 27 earlier this month.  8K Mini-LED/QD sets have declined the most since last year, down 41.7%, while 4K Mini-LED/QD sets have declined 39.9% over the last year, with QD only sets down 28.1% in the aggregate.
Since the Samsung 2022 Mini-LED/QD line was released in April today’s readings are the first to show discounting from those original prices, with an overall decline of 7.0% from initial April pricing, andthat includes one model set (4K Mini-LED/QD) that was just released.  8K Mini-LED/QD sets declined 8.1%, while 4K Mini-LED/QD sets declined 5.3%, and QD only sets dropped 8.3%.  In order to illustrate the price path of the 2021 models and the staring points of the equivalent 2022 models we have the price charts for the various models below.  W note that while the 2021 timeline is accurate, we have added the 2022 models as if they followed the same 2021 timeline to see how they track against last year’s price reductions and starting points, with the 2022 models represented as dotted lines. 
In most cases the 2022 line initial prices were lower than those in 2021, with the average 2022 starting price for the entire line 6.7% below the initial price of the 2021 line, which would portend interim and holiday pricing for the 2022 line below that of last year.  LCD TV panel prices have certainly come down on a y/y basis and we expect Mini-LED backlight arrays have also been reduced in price as new suppliers enter the market, but other components, raw materials, and transport costs have increased, offsetting some of those panel and backlight price declines.  Chinese brand TCL (000100.CH), the first TV brand to offer Mini-LED TV sets, has just released their 2022 (4th generation) Mini-LED/QD set line, which is priced considerably below the Samsung line, which would likely account for Samsung’s first round of price cuts (see Table 1 ), although Samsung considers its TV line to have more sophisticated features and a higher quality than Chinese brands and therefore deserving of a premium.  Consumers will determine if that is true for this line….

India is the 2nd largest market for smartphones and hosts assembly and component manufacturing for Samsung (005930.KS), Apple, Xiaomi (1810.HK), Vivo (pvt), Oppo (pvt), and others, but the country does not have any capability for producing LCD or OLED displays themselves.  The Indian government has sponsored various incentive programs over the last few years to attract producers to produce displays locally but most panel manufacturers are wary of building a new fab without the specialized infrastructure needed to support such an endeavor.  Such display complexes in Taiwan, South Korea, Japan and China are built around component supplier manufacturers, some of which are situated adjacent to the display facility to reduce transportation issues, and while India does have a plentiful supply of workers for assembly and similar processes, the country lacks both the supporting infrastructure (including reliable power and water) and the skilled talent to operate and maintain display fabs.
Display projects are expensive ($3b to $b typically for OLED) and require considerable government support both logistically and financially, to become a reality, and we have seen a number of display projects in China come and go over the last decade because of a lack of management and operating expertise, even with the support of the government, so when we read that a company with no experience in the display industry is ‘looking to sign an MOU with one Indian state within the next few weeks’ concerning such a project.  The company is Rajesh Exports (RJEX.IN), a Bangalore based company that is, according to the company, the largest processor of gold globally and the world’s lowest cost gold jewelers producer.  The company, also investing in the EV market (no experience there either), is looking to take advantage of the Indian government’s semiconductor incentives through a subsidiary Elest (pvt) in order to gain access to the potential financial funding, but will also fund through ‘internal accruals’, along with private equity infusions after the first year, with the project taking between 6 and 7 years.
So far there are 5 companies who have applied to access the government funding, committing a total of $20.5b, with one company having signed an agreement under the semiconductor and display portion of the incentives, ISMC Digital Fab (pvt) based in Mumbai, for a $3b plant, while other participants continue to look for deals with Indian state governments.  There is no doubt that India is a growing market for CE products and one that can support considerable assembly and board level production, but we are less sure that display projects are currently a viable alternative to China, Taiwan, Korea, or Japan, especially as the need for expertise in OLED displays manufacturing continues to grow.  Not saying it can’t happen, but most of the major display manufacturers have passed on the idea, which leaves the territory open to others, regardless of their experience.  Even with considerable government funding we give such display projects a relatively low chance of success and remind investors that Foxconn (2354.TT), the world’s largest assembler of CE products and the largest assembler in India, still has a mostly empty campus in Wisconsin that was going to be the first LCD fab in the US…still waiting on that one.

Samsung Electronics (005930.KS) is among the few companies with commercial Micro-LED product, one intended for what would have to be considered public displays.  To understand the size of these displays, the graphic below shows their size relative to an average height person however Samsung also considers these displays as ‘luxury’ personal viewing platforms for those who want the ‘ultimate lifestyle experience’, including using these displays for artwork when not in use, for a home office, and of course for entertainment.  That said, the cost for the larger configurations run above $500k, although free delivery is included, but the real purpose here is a platform that Samsung can use to refine Micro-LED technology until it become viable for actual retail displays.
To that end Samsung will soon be introducing the next level in its Micro-LED “The Wall” product line, which will shrink pixel spacing further and therefore pack more pixels in each ‘cabinet’ from which these massive displays are made. The cabinets, which are essentially interconnected building blocks, weigh ~27 lbs, are roughly 36” long by 20” long and about 3” deep, and can be configured anyway the customer should desire, but most important to us is the pixel pitch, which is the distance between each pixel.  In very large displays such as these, the viewer is a distance away from the screen (recommended viewing distance for an 85” 4K display is 5.25’) and cannot see individual pixels, but as the resolution of TVs moves higher, the user can get closer without the image being broken up into ‘dots’.  With each new resolution iteration come more pixels and more electronics and more difficulties in producing and placing these progressively smaller Micro-LEDs, so as Samsung and others reduce the pixel pitch, we watch to see if they can hold or lower costs.
While it might not sound like a big change, the increase from earlier models is ~7x in the same cabinet space, and while that is still 1/9 the resolution of a 4K TV, typical user distances from such displays are considerably greater than would be the case for retail TV viewing, so such high resolutions are not as necessary, although the goal is to continually shrink the pixel size and pixel pitch with each new model.  Price for the new model has yet to be announced, so we cannot yet track improvements in production methods and other costs, but while “The Wall” seems to be an expensive commercial product or a rich man’s toy, it is a proving ground for Micro-LED technology and helps to establish a timeline where Micro-LED technology will become competitive with other display modalities.  As higher resolution displays do not come without a ‘cost’, we include the power consumption of each as it increases as the number of LEDs increases.

​We have noted the ongoing negotiations between OLED TV panel producer LG Display (LPL) and Samsung Electronics that have been the fodder for headlines citing “Signed, Sealed, & Delivered” to “Still Very Far Apart” over the last few months.  As the days pass, it gets more difficult for Samsung to gain enough momentum to establish an OLED TV presence, with a Chinese firm indicating that it believes Samsung will not offer an OLED TV line this year, other than its own QD/OLED sets produced by affiliate Samsung Display (pvt). 
Citing a number of factors the Chinese firm RUNTO has lowered its forecast for global OLED TV shipments  from 10m units this year to between 7.9m and 8.1m, reducing its growth rate expectations from 53.8% to 23.0% based on 6.5m units shipped last year and also lowered its forecast for TV shipments overall from 219m to less than 210m units.  With the negotiations still not final, and TV panel prices moving further in Samsung’s favor, it gets progressively harder for Samsung to avail itself of the ~4m total OLED sets it needs to represent 10% of its TV sales according to RUNTO.  With expectations that Samsung Display will be able to produce between 750,000 and 1.4m QD/OLED units this year (We expect between 700,000 and 725,000 units – as per our 04-18-22 note) that would leave Samsung with the need for purchasing between 3m and 3.6m WOLED panels from LG Display this year to meet RUNTO’s 10% of total TV sales target. 
With RUNTO’s 11m unit expectations for LG Display’s WOLED panel production and using the same percentages purchased by LG Electronics, Sony (SNE) and other customers last year, leaving ~1.5m units for Samsung to purchase.  When added to the QD/OLED sets purchased from Samsung Display, the total of 2.25m to 3m units falls short of the 10% of TV sales RUNTO feels is necessary for Samsung to initiate an OLED line this year.  Based on that conclusion, the war in Ukraine, the COVID outbreaks and lockdowns in China, and inflation, the company makes the assumption that Samsung will not purchase WOLED panels from LG Display this year.
Again, these are not our assumptions or numbers but we present the concept as a possible outcome (one of many) that are possible given the current circumstances surrounding the display business.  While we do not agree with some of the estimates, not would we assume that unit volume share allocations would be identical to those made last year, the above is certainly possible, although such a decision by Samsung would put the introduction of the expected QD/OLED TV product in a different light.  As part of an overall OLED TV strategy QD/OLED can be offered as the ‘top tier’ of OLED TVs, while on its own it is more of a curiosity than a full product line. 
While we value the scenario noted above, we expect there are many more variables that play into the Samsung LG negotiations and delays have been working in Samsung’s favor.  If Samsung can negotiate a long-term unit volume based contract with LGD at a lower price than late last year, it would serve them well over the next few years, and if that means postponing the full OLED line this year, we expect Samsung’s TV marketing department will find another hook to attract customers during the holiday season.  Regardless, it is interesting to hear what is in our mind a more radical view of the situation, rather than the daily “We know the answer” headlines that tend to appear after an influencer speaks with a low level supplier...

Now that Samsung Electronics (005930.KS) has begun to market its 2022 Mini-LED/QD TV line we have two data sets to compare, and in an unusual environment.  On the positive side (for TV brands) TV panel prices continue to decline, which is usually the key to generating higher TV set revenue, but at the same time other component costs and transportation costs are rising, with the specter of inflation reducing consumer buying power.  Typically when the yearly new TV line is released, previous year’s models decrease in price as new inventory is acquired, however if the new line is appreciably more expensive than the previous year’s models, older model demand and price can increase as consumers look for an alternative to the higher priced current year models.
This year seems different in that while last year’s models have been declining in price as Samsung released this year’s models, those declines seem to have slowed recently, with charts for last year’s model prices beginning to level off and new model prices declining at a slower pace than last year.  We expect this has little to do with ‘alternative’ pricing and more to do with component and transportation costs that are more than offsetting TV panel price declines.  2021 models are still down 7.5% YTD, but such declines seem to be slowing and prices leveling off.   New model prices are also declining as expected but so far at a slower rate than last year, likely for the same reasons.  All in what looked like a good year for TV set sales now is beginning to look a bit less so as COVID-19 lockdowns in China and continuing shortages are wiping out some of the positives that would help the TV set space this year

​Samsung Electronics has agreed to raise the average salary of all employees by 9% this year after continued negotiations with the company’s labor-management council that had requested an increase of 15%.  The increase agreed upon was the highest increase in the last 10 years and is usually announced in March, but difficult negotiations in light of general economic conditions took two months longer than usual and with Samsung’s 1st quarter operating profit up 50.5%, it was likely a forgone conclusion that the company would have to share a portion of those profits with employees.

​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.

​Now that Samsung Electronics (005930.KS) has begun offering its 2022 line of Mini-LED/QD and QD only TVs (or at least in part), we can look at how TV set pricing has progressed with last year’s models and how the new line’s pricing compares with 2021 pricing.  We note that while this is a microcosm of the TV space, it is at least a representation of how companies adjust TV set prices, particularly in the premium category and how seasonality and other factors affect that pricing.  The 2022 Mini-LED/QD and QD only line is essentially the same as the 2021 line other than the elimination of the 70A (2021) class, which consisted of four sizes of 4K Quantum Dot TVs.  Given that the series above (80A) and below (60A) duplicated all of those sizes and provided almost the same combination of features at similar prices, we expect Samsung saw no need to bring back that line.

When Samsung began to accumulate TV panels for the Mini-LED/QD line last year TV panel prices were on the rise (Figure 1), while this year TV panel prices had fallen considerably from the highs reached in July of last year.  Based on February Aggregate TV panel pricing, TV panels acquired in February 2022 were 38.8% lower in price than during the same period last year, while offsets would be rising component, silicon, and transportation costs, but Samsung has lowered the initial price of this year’s models by only 6.7%, with the bulk of the reductions in the lower price tier Mini-LED/QD line (85 Series) and the higher prices QD only line (80 Series).  Due to the potential for feature changes and potential cost offsets mentioned above in the 2022 line, it is difficult to understand exactly how much of the panel cost savings Samsung has passed on to consumers, at least as part of initial 2022 pricing, but we assume they continue to capture considerably more margin on this line than on the more generic standard LCD TV line.  We expect also that Mini-LED backlight costs are lower on a y/y basis as the number of suppliers has increased.
Based on the rate of change data (Figure 1) for the entire line, we expect to see price reductions as soon as the end of May, with the biggest price drops in June/July (summer sales), for Columbus Day in October and the Thanksgiving Holiday.  That said, the single largest overall price decline came in February of this year, usually due to a push to reduce previous year inventory as new models go into production.  The worst time to buy, at least from this sample, is right before Christmas, as desperate gift buyers tend to be more willing to pay a premium as time runs out, and similarly just before Chinese New Year, likely for the same reason.  Most significant however, is the fact that in the 328 days since the 2021 line became available the aggregated price of the entire line has decreased by 29.6% from initial prices, and 27 of the 35 models are currently at their lowest price point (one is at its highest), and across the top of the line (900 Series), which are 8K Mini-LED/QD sets, that group is down 46.7% from its initial pricing.