Is the ‘Glorious’ OLED TV Revolution Coming Soon?
Considerable talk was generated when China’ largest panel producer BOE exhibited a 95” 8K OLED panel at the SID show last month, giving rise to speculation that BOE intends to both produce that panel commercially and also to produce a line of 4 additional large panel OLED panel sizes starting at 55”. The panel shown was produced on a pilot line at BOE’s B5 fab, using a WOLED (White OLED) process similar to that used by LG Display and an IGZO backplane. The pilot line and the remaining B5 fab is set up as a Gen 8.5 line using a half cut process, which means the system can deposit OLED materials on half of the Gen 8.5 sheet and must process the other half separately. Given that 2 95” panels can be cut from a Gen 8.5 substrate at an efficiency of 90%, the half cut process is ideal for this panel size, but half cut processing is more difficult than the ¼ cut processing used for smaller IT panels and making that transition can bring down yield. It would seem that BOE has mastered that change, at least on it pilot line, allowing it to produce large OLED panels on a Gen 8 line.
The ability to process ½ cut OLED panels on a full 15,000 sheet/month line, such as exists at the company’s B16 fab in Chengdu, BOE must be able equip the line with ½ cut deposition equipment, which is typically produced by Canon-Tokki (CAJ). Those tools are both expensive and have an extended lead times, which means ordering the equipment to get into the queue is essential for timely production and the cut status of BOE’s Gen 8.5 lines at either B5 or B16 is unknown. We estimate that based on a 15,000 sheet line at 100% yield, BOE could produce ~60,000 OLED panels each month, which when using a more realistic yield of 75% becomes ~45,000 units monthly, and we believe that a 75% yield for a new producer and a new process is generous, and while we have already seen headlines predicting the rapid share loss of South Korean OLED producers, we expect the impact of BOE’s push toward large panel OLED commercialization will take some time to materialize.
The good news for BOE is that relatively few OLED TV panels are produced each year, with an expected 10m panels this year, and therefore a relatively small production line will have an impact on share of the market. That said, we believe the biggest issue facing BOE in this situation is yield, which, at times, has been a limiting factor for LG Display, who has had more experience producing large panel WOLED displays than any other producer, especially when opening a new line or fab. Producing a few ultra-large panels on a pilot line is one thing but producing high volumes is another and much of BOE’s OLED experience in in small panel OLED production. As a public company in China, BOE does have to work within certain financial norms, and is expanding its OLED production to meet Apple’s (APPL) needs for small panel OLED displays, while developing production infrastructure for IT OLED products to try to capture Apple’s iPad business in the future. Running what would likely be a money losing fab for many months puts additional pressure on the company’s profitability, especially during a period when LCD panel prices are declining. We would expect BOE to sample large panel OLED displays to all of LGD’s customers, and would likely be the lower cost alternative, but both the ability to meet volume targets and reliability of product will take time to become established, so our expectations are that BOE’s impact on the large panel OLED space will be modest this year and will take time to build in 2023.
Based on our calculations, we would expect BOE to be able to produce 473,400 units during the 1st 12 months of production on a 15,000 sheet line, against LGD’s estimated 10m units this year. Impact yes, ‘glorious revolution’ maybe less so.
The ability to process ½ cut OLED panels on a full 15,000 sheet/month line, such as exists at the company’s B16 fab in Chengdu, BOE must be able equip the line with ½ cut deposition equipment, which is typically produced by Canon-Tokki (CAJ). Those tools are both expensive and have an extended lead times, which means ordering the equipment to get into the queue is essential for timely production and the cut status of BOE’s Gen 8.5 lines at either B5 or B16 is unknown. We estimate that based on a 15,000 sheet line at 100% yield, BOE could produce ~60,000 OLED panels each month, which when using a more realistic yield of 75% becomes ~45,000 units monthly, and we believe that a 75% yield for a new producer and a new process is generous, and while we have already seen headlines predicting the rapid share loss of South Korean OLED producers, we expect the impact of BOE’s push toward large panel OLED commercialization will take some time to materialize.
The good news for BOE is that relatively few OLED TV panels are produced each year, with an expected 10m panels this year, and therefore a relatively small production line will have an impact on share of the market. That said, we believe the biggest issue facing BOE in this situation is yield, which, at times, has been a limiting factor for LG Display, who has had more experience producing large panel WOLED displays than any other producer, especially when opening a new line or fab. Producing a few ultra-large panels on a pilot line is one thing but producing high volumes is another and much of BOE’s OLED experience in in small panel OLED production. As a public company in China, BOE does have to work within certain financial norms, and is expanding its OLED production to meet Apple’s (APPL) needs for small panel OLED displays, while developing production infrastructure for IT OLED products to try to capture Apple’s iPad business in the future. Running what would likely be a money losing fab for many months puts additional pressure on the company’s profitability, especially during a period when LCD panel prices are declining. We would expect BOE to sample large panel OLED displays to all of LGD’s customers, and would likely be the lower cost alternative, but both the ability to meet volume targets and reliability of product will take time to become established, so our expectations are that BOE’s impact on the large panel OLED space will be modest this year and will take time to build in 2023.
Based on our calculations, we would expect BOE to be able to produce 473,400 units during the 1st 12 months of production on a 15,000 sheet line, against LGD’s estimated 10m units this year. Impact yes, ‘glorious revolution’ maybe less so.
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