BOE turns on Chengdu OLED fab
While we noted that BOE (200275.CH) had committed to the construction of a Gen 6 OLED fab in Chengdu, China back on 12/30/2014, and had capped the fab as of April 19th of this year, the Chinese press has indicated that the fab is now in production. It would seem that our timeline (and that of the Chinese press) was a bit behind, as now it is said that the fab was capped in July 2016, rather than last month. This obviously makes more sense given that the capping process (finalizing the roof construction) would lead to equipment move in and tuning, which would be expected to take 6 months rather than one.
Our timeline for the fab however, has not changed, with our expectation for phase 1 production to begin in June and phase 2 production to begin early in 2018, followed by phase 3 in June 2018. This is a very aggressive build schedule, but BOE is known for meeting or beating their construction schedules, and we believe they will keep to this timeline. Our expectations that the fab will have a maximum capacity of 45,000 sheets/month when fully built-out also remains.
That said, actually producing product is a bit different from having an ‘opening’ ceremony, which usually represents the fab’s ability to run a glass substrate through the entire line. It can take considerable time for the OLED process to be refined enough by panel manufacturers to begin to produce samples and eventually bring the line to an acceptable yield, and much of those refinements are based on the experience of the display production team. We model a slower ramp for BOE than we might for Samsung Display, based on OLED production experience, although we believe the Chengdu fab is based on rigid OLED substrates, far less problematic than flexible OLED production.
Our timeline for the fab however, has not changed, with our expectation for phase 1 production to begin in June and phase 2 production to begin early in 2018, followed by phase 3 in June 2018. This is a very aggressive build schedule, but BOE is known for meeting or beating their construction schedules, and we believe they will keep to this timeline. Our expectations that the fab will have a maximum capacity of 45,000 sheets/month when fully built-out also remains.
That said, actually producing product is a bit different from having an ‘opening’ ceremony, which usually represents the fab’s ability to run a glass substrate through the entire line. It can take considerable time for the OLED process to be refined enough by panel manufacturers to begin to produce samples and eventually bring the line to an acceptable yield, and much of those refinements are based on the experience of the display production team. We model a slower ramp for BOE than we might for Samsung Display, based on OLED production experience, although we believe the Chengdu fab is based on rigid OLED substrates, far less problematic than flexible OLED production.
BOE OLED Capacity - Source: SCMR LLC, OLED-A, Company Data
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