Samsung OLED line expanding
Early this month we noted that Samsung (005930.KS) had verified that it would release a new Galaxy Tab S3 at Mobile World Congress, the first new high-end tablet the company has released since September 2015. In our note we pointed out that the significance of such a device, should it have an OLED display, would be the continuation of Samsung’s use of OLED in its high-end tablet line, which it had not used in its low-end Tab A & E models. The just announced model has a slightly larger (9.7”) display than we had expected (previous was 9.6”) and represents the equivalent of 3.8 5” smartphones in area.
The tablet market has been deteriorating since its peak in 2014, and while expectations for a 2017 low point and modest increases from 2018 to 2020 have been predicted, we see both the larger average size of smartphones, and the impact of detachables weighing on the space. Early tablet market share holders such as Asus (2357.TT) and Barnes & Noble (BKS) have dropped below the top 10 with the market dominated by Apple (AAPL), Samsung, Lenovo (992.HK), Huawei (pvt), and Amazon (AMZN) and an increasing percentage of white box brands, particularly in China. While the overall impact of a new OLED tablet will not make or break Samsung’s numbers in 2017, it is important for the company to maintain the use of OLED displays in their high end small panel products and the new tab continues this trend. Ideally we would hope they will eventually extend the use of OLED displays into the lower priced A & E tablet lines, as they have done in the smartphone market, but Samsung’s OLED capacity remains tight and better margins are likely on the smaller OLED displays.
Samsung also revealed the Galaxy Book line, which consists of a 10” and 12” ‘2-in-1’ type tablets, essentially tablets with detachable keyboards, an increasingly common configuration for high-end tablets, which puts them in competition with notebooks, but at the same time blurs the statistics as to what should be regarded as a tablet. What makes these (actually one of them) important is that the 12” model uses an OLED screen, a step up in size for Samsung’s OLED display category, which would be the equivalent of 5.8 5” smartphones, and while the unit volumes of these devices will be small relative to the Samsung smartphones lines, it is incremental to Samsung’s OLED display business going forward, and represents Samsung Display’s further commitment to OLED for small panel devices and their constant push to increase the screen size of its small panel OLED production. We would surmise that the 10” model, which uses an LCD screen, could not support the cost of the OLED display, which given its early stage of production and low starting volumes, would be more expensive that the 10” LCD screen.
Samsung has produced larger OLED screens (13” for Dell’s (pvt) Alienware gaming laptop, 13” for the HP (HPE) Spectre X360, or the 14” Lenovo ThinkPad X1 Yoga), but has not entered the market for OLED laptops itself. We have no timeframe at which we believe Samsung will enter the OLED laptop space, as we believe it will depend more on the relative cost of the display coming from Samsung Display (pvt) and the overall potential profitability of such a laptop, but each time Samsung Display and Samsung Electronics moves up the screen size curve, it signals that the structure of SDC’s OLED display business is moving toward a profitable structure for larger panels.
The tablet market has been deteriorating since its peak in 2014, and while expectations for a 2017 low point and modest increases from 2018 to 2020 have been predicted, we see both the larger average size of smartphones, and the impact of detachables weighing on the space. Early tablet market share holders such as Asus (2357.TT) and Barnes & Noble (BKS) have dropped below the top 10 with the market dominated by Apple (AAPL), Samsung, Lenovo (992.HK), Huawei (pvt), and Amazon (AMZN) and an increasing percentage of white box brands, particularly in China. While the overall impact of a new OLED tablet will not make or break Samsung’s numbers in 2017, it is important for the company to maintain the use of OLED displays in their high end small panel products and the new tab continues this trend. Ideally we would hope they will eventually extend the use of OLED displays into the lower priced A & E tablet lines, as they have done in the smartphone market, but Samsung’s OLED capacity remains tight and better margins are likely on the smaller OLED displays.
Samsung also revealed the Galaxy Book line, which consists of a 10” and 12” ‘2-in-1’ type tablets, essentially tablets with detachable keyboards, an increasingly common configuration for high-end tablets, which puts them in competition with notebooks, but at the same time blurs the statistics as to what should be regarded as a tablet. What makes these (actually one of them) important is that the 12” model uses an OLED screen, a step up in size for Samsung’s OLED display category, which would be the equivalent of 5.8 5” smartphones, and while the unit volumes of these devices will be small relative to the Samsung smartphones lines, it is incremental to Samsung’s OLED display business going forward, and represents Samsung Display’s further commitment to OLED for small panel devices and their constant push to increase the screen size of its small panel OLED production. We would surmise that the 10” model, which uses an LCD screen, could not support the cost of the OLED display, which given its early stage of production and low starting volumes, would be more expensive that the 10” LCD screen.
Samsung has produced larger OLED screens (13” for Dell’s (pvt) Alienware gaming laptop, 13” for the HP (HPE) Spectre X360, or the 14” Lenovo ThinkPad X1 Yoga), but has not entered the market for OLED laptops itself. We have no timeframe at which we believe Samsung will enter the OLED laptop space, as we believe it will depend more on the relative cost of the display coming from Samsung Display (pvt) and the overall potential profitability of such a laptop, but each time Samsung Display and Samsung Electronics moves up the screen size curve, it signals that the structure of SDC’s OLED display business is moving toward a profitable structure for larger panels.
Figure 1 - Samsung Electronics Galaxy Book 12"model - Source: BGR.com
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