On again, off again – LG Display to supply OLED displays to Apple this year
Once again, the Korean technology press has changed their mind about whether LG Display will be supplying small panel OLED displays to Apple (AAPL) in 2018. According to ‘industry sources’, ETNews is stating that LG Display ‘temporarily confirmed’ that it will be supplying Apple with flexible OLED displays for the new iPhone that is expected to be released later this year. The details are quite thin although 15m to 16m units have been quoted and a size of 6.5” for the panel has also been rumored, but negotiations are said to be ongoing (quite likely as LG Display is still building out its E6 fab in Paju).
Based on a June 2018 opening of the new E6 fab, we calculate that if LGD dedicated the entire line to Apple, they could produce ~1,000 sheets in 1H and 31,500 sheets in 2H. This would translate to 2.3m units in 1H and 7.3m in 2H at 100% yield. While LG Display has been involved in producing small panel flexible OLED displays for a number of years, a new fab will likely take a bit of time to both get into full production and bring yields up to acceptable levels. Based on a 70% average 1H yield, they would be able to produce 1.6m yielded units in 1H, and using an average 80% yield in 2H, they could produce 5.8m units in 2H, for a total of 7.4m units in 2018. In these numbers we make quite a few assumptions, particularly those concerning LG Display’s ability to meet timelines, ramp production, and improve yield. As we take a conservative view here, we struggle to see how LG Display will produce the aforementioned 15m to 16m units in 2018 if they are being produced only at the Paju facility. If we forget all ramp up assumptions and start LGD’s production on June 1 at a full 15,000 sheets/month and 100% yield, they could produce a total of ~24m units in 2018, but that is only a calculation for perspective.
The same ‘industry sources’ mentioned above have indicated that Samsung Display (pvt) is expected to supply Apple with 180m to 200m small panel OLED displays this year as their primary supplier, and rightly so given few other suppliers are able to meet both Apple’s high volumes and technical specifications. As has been discussed, Apple is certainly looking to broaden their display supply chain, but at the moment must rely on Samsung for its immediate production. Other small panel OLED producers are obviously wooing Apple with demos, samples, and promises of high volume availability, but in 2017 we believe Samsung Display’s share of the small panel flexible OLED display market is still in the mid 90% range on a unit volume basis, and despite the constant press releases extolling the virtues of small panel flexible OLED displays from other vendors, we expect only a modest change of unit share in 2018. Apple is inherently a difficult customer, as they usually push the limits of at least one technology with every new model year, which gives Samsung Display a considerable leg up in staying on Apple’s good side toward technology changes on the display front, while others are trying to gain production expertise and yield, before they have to deal with Apple’s exacting specifications. 2019 will likely be a far more fertile ground for other small panel flexible OLED display suppliers.
Based on a June 2018 opening of the new E6 fab, we calculate that if LGD dedicated the entire line to Apple, they could produce ~1,000 sheets in 1H and 31,500 sheets in 2H. This would translate to 2.3m units in 1H and 7.3m in 2H at 100% yield. While LG Display has been involved in producing small panel flexible OLED displays for a number of years, a new fab will likely take a bit of time to both get into full production and bring yields up to acceptable levels. Based on a 70% average 1H yield, they would be able to produce 1.6m yielded units in 1H, and using an average 80% yield in 2H, they could produce 5.8m units in 2H, for a total of 7.4m units in 2018. In these numbers we make quite a few assumptions, particularly those concerning LG Display’s ability to meet timelines, ramp production, and improve yield. As we take a conservative view here, we struggle to see how LG Display will produce the aforementioned 15m to 16m units in 2018 if they are being produced only at the Paju facility. If we forget all ramp up assumptions and start LGD’s production on June 1 at a full 15,000 sheets/month and 100% yield, they could produce a total of ~24m units in 2018, but that is only a calculation for perspective.
The same ‘industry sources’ mentioned above have indicated that Samsung Display (pvt) is expected to supply Apple with 180m to 200m small panel OLED displays this year as their primary supplier, and rightly so given few other suppliers are able to meet both Apple’s high volumes and technical specifications. As has been discussed, Apple is certainly looking to broaden their display supply chain, but at the moment must rely on Samsung for its immediate production. Other small panel OLED producers are obviously wooing Apple with demos, samples, and promises of high volume availability, but in 2017 we believe Samsung Display’s share of the small panel flexible OLED display market is still in the mid 90% range on a unit volume basis, and despite the constant press releases extolling the virtues of small panel flexible OLED displays from other vendors, we expect only a modest change of unit share in 2018. Apple is inherently a difficult customer, as they usually push the limits of at least one technology with every new model year, which gives Samsung Display a considerable leg up in staying on Apple’s good side toward technology changes on the display front, while others are trying to gain production expertise and yield, before they have to deal with Apple’s exacting specifications. 2019 will likely be a far more fertile ground for other small panel flexible OLED display suppliers.
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