Apple in talks with BOE on OLED?
Now that Apple (AAPL) has been rumored to have negotiated two contracts with Samsung Display (pvt) for 160m OLED displays, the rumor mill continues to expand, now including rumored talks with Beijing based BOE (200725.CH) for OLED displays, or at least is evaluating BOE’s OLED displays. BOE has a number of OLED production and R&D projects in development, with a Gen 5.5 LTPS OLED line in Ordos, and Gen 6 line in Mianyang, and a Gen 6 line in Chengdu, along with a pilot line in Hefei.
We believe the capacity at the Ordos project is small, although we expect a substantial increase during the 3rd quarter of this year and the Chengdu OLED fab is also expected to begin production this year, at least at the phase 1 level, but the Mianyang lines are a bit further out, likely close to 3Q 2019, and will be focused on flexible OLED production. Details of our production expectations for BOE and other OLED producers is available upon request.
We note that just because the fab has started up new capacity does not mean it is able to produce in high volume, as new lines, especially at producers with only modest experience in OLED production, can take considerable time to achieve reasonable yield levels, and we know that BOE has had issues with deposition yields in the past. That said, BOE has been relentless in its development of LCD technology over the last few years, and while we expect their OLED production to remain somewhat limited this year, they have the potential to become a substantial supplier in the 2018/2019 timeframe.
Not that we doubt that Apple is testing BOE’s OLED product, but we would expect Apple to evaluate any available OLED product, or at least from any producer that can provide at least moderate levels of OLED production in the near future. We have seen one actual production level OLED product from BOE so far, a 5” 1280 x 720 panel that we believe is being used by a Chinese smartphone brand, but consider that a ‘starter’ product, as it is a relatively low resolution display. However, we would expect Apple to more seriously evaluate BOE and other Chinese LCD products for non-OLED Apple products, particularly should Apple see a need for a lower price tier product for the iPad. While we would not expect Apple to make a major shift away from current suppliers in the near future, we could see Chinese suppliers being adopted as a 2nd or 3rd source supplier, to make sure they can meet specs and volumes as Chinese suppliers gain legitimacy. A deal, even a small one, with Apple would be a significant psychological win for any of the Chinese suppliers.
We believe the capacity at the Ordos project is small, although we expect a substantial increase during the 3rd quarter of this year and the Chengdu OLED fab is also expected to begin production this year, at least at the phase 1 level, but the Mianyang lines are a bit further out, likely close to 3Q 2019, and will be focused on flexible OLED production. Details of our production expectations for BOE and other OLED producers is available upon request.
We note that just because the fab has started up new capacity does not mean it is able to produce in high volume, as new lines, especially at producers with only modest experience in OLED production, can take considerable time to achieve reasonable yield levels, and we know that BOE has had issues with deposition yields in the past. That said, BOE has been relentless in its development of LCD technology over the last few years, and while we expect their OLED production to remain somewhat limited this year, they have the potential to become a substantial supplier in the 2018/2019 timeframe.
Not that we doubt that Apple is testing BOE’s OLED product, but we would expect Apple to evaluate any available OLED product, or at least from any producer that can provide at least moderate levels of OLED production in the near future. We have seen one actual production level OLED product from BOE so far, a 5” 1280 x 720 panel that we believe is being used by a Chinese smartphone brand, but consider that a ‘starter’ product, as it is a relatively low resolution display. However, we would expect Apple to more seriously evaluate BOE and other Chinese LCD products for non-OLED Apple products, particularly should Apple see a need for a lower price tier product for the iPad. While we would not expect Apple to make a major shift away from current suppliers in the near future, we could see Chinese suppliers being adopted as a 2nd or 3rd source supplier, to make sure they can meet specs and volumes as Chinese suppliers gain legitimacy. A deal, even a small one, with Apple would be a significant psychological win for any of the Chinese suppliers.
Raw OLED Capacity Share 2011- 2020 - Source: SCMR LLC, Displaysearch, OLED-A, Company Data
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