OLED Smartphone Shipments & More…
Small panel shipments, essentially those for smartphones, can be a difficult business for panel producers as it is not only a highly competitive market but one that has become bisected by two opposing technologies. Traditionally, LCD displays have been used in smartphones, but over the last few years OLED smartphone displays have become quite important to smartphone brands, especially in flagship or premium priced phones. The number of colors a display can reproduce is not determined by the type of technology used but the number of shades of each color (red, green, blue) that the display can reproduce (known as bit depth)., with the standard being 8 bits or 16.777m colors[1]. OLED displays however are self-emissive, meaning each red, green, and blue sub-pixel can be off completely, on completely, or a number of gradations between the two, which, in theory provides infinite contrast[2]. LCD sub-pixels contrast is controlled by the backlight that shines through or is blocked by the liquid crystal, however there are far fewer LED backlight ‘sources’ than there are LCD sub-pixels, so if an image calls for a black area right next to a white area (such as a star field) the black area will appear grayish rather than pure black as the LED behind both pixels will be on for the white ‘star’.
This gives OLED displays an advantage over LCDs in terms of contrast, and RGB OLED displays also have a faster response time, keeping fast moving objects from smearing or leaving trails as they move across the screen, which can be a problem for LCD displays, but OLED displays do have some issues, primarily they do not usually produce as much light (brightness) as LCD displays. As the OLED material itself is generating the light, the OLED material itself determines the basic brightness of the display, while LCD display brightness is basically determined by the brightness of the LED backlight[3], so it is incumbent on OLED material suppliers to constantly improve such materials to compete with LCD small panel displays. OLED RGB displays also have another issue in that the three OLED materials used to create colors do not age at the same rate. This can cause an effect called ‘burn-in’ that creates ‘ghost’ images of banners or other images that remain on the screen for an extended time, such as a logo on a news show.
But even with these issues, OLED displays have become popular enough to dominate the premium smartphone category and take a significant share of the total smartphone market, a bit over 40% depending on the source. We estimate that between 615m and 620m small panel OLED displays were shipped last year, up 20.8% over 2020 shipments and representing 45.7% of mobile device shipments based on our composite smartphone shipment totals, an increase from 39.6% in 2020. However much has been said recently about how Chinese small panel OLED display producers have been gaining ground against the incumbent leader, Samsung Display (pvt), and as the dominant supplier of small panel OLED displays, it is inevitable that SDC’s share of that market will be reduced as other producers ramp production capacity and develop the expertise needed to maintain acceptable yields.
We believe that SDC’s share of the composite[4] small panel OLED market decreased last year from 77.6% to 70.5%, although SDC’s unit volume increased over the same period by 9.8% while all other producers gained share and expanded unit volumes. As referenced below, there are both rigid and flexible OLED small panel displays in those numbers and a bit more granularity can be determined, especially as flexible small panel OLED displays carry higher ASPs, making them more lucrative for those that are generating high enough yields and utilization to remain profitable. Looking specifically at flexible small panel OLED displays only, there was more intense competition from suppliers and SDC’s share in 2021 declined to 56.9% from 68.3% in 2020, although again, SDC’s actual flexible small panel OLED shipments grew in 2021, despite the share loss.
The problem is scale, and while the flexible small panel OLED market saw a 28.2% increase in shipments in 2021, SDC’s growth was below overall industry growth because of its size. The same goes for the composite small panel OLED market shown in Figure 6 and follows in the rigid small panel OLED category also, where SDC has an even bigger share (83.7% in 2021 down from 88.0% in 2020). Samsung has the choice of further expanding small panel OLED capacity to continue to maintain share, or concentrate on higher value small panel OLED products. A continued domination of small panel flexible OLED products would seem to be the proper goal, but SDC has taken it one step further and has become the dominant force in foldable OLED displays, which carry an even higher price premium than flexible small panel OLED displays, which tells us that SDC’s advanced planning for small panel OLED tends to be far ahead of most others. Of course, it is easier to make such decisions when you are as large as SDC and have a parent who is among the top smartphone suppliers globally, but SDC has to make such decisions in a vacuum and cannot anticipate how fast they will progress down the learning and profitability curve and whether their assumptions about small panel flexible OLED pricing are correct as to price and timing.
While others proclaim the loss of share as the end of the Samsung Display ‘era’ we point to the LCD large panel space where Chinese panel producers have built out significant capacity and now hold a dominant share of the large panel LCD market. While this was a good strategy for much of 2020 and part of 2021, we look at a longer-term view and expect that the small panel ‘generic’ flexible OLED market will become crowded more quickly than expected, and competition, even between Chinese producers will become even more intense. While SDC will lose more small panel flexible OLED in 2022, the real question is whether they will maintain profitability growth in a static pricing environment and whether that will hold true in a weak pricing environment. The idea is to make money, not wave a flag, so we are still on the side of the SDC philosophy, even if it means losing share.
[1] Example: Adding 2 more bits of information to each of three colors changes the possible color combinations from 16.777m possible color combinations to a staggering 1.073b color combinations.
[2] Contrast: The difference from the deepest black and the whitest white,
[3] Brightness in LCD RGB displays is also reduced by the color filter used to generate each colored sub-pixel.
[4] Both rigid and flexible small panel OLED displays.
This gives OLED displays an advantage over LCDs in terms of contrast, and RGB OLED displays also have a faster response time, keeping fast moving objects from smearing or leaving trails as they move across the screen, which can be a problem for LCD displays, but OLED displays do have some issues, primarily they do not usually produce as much light (brightness) as LCD displays. As the OLED material itself is generating the light, the OLED material itself determines the basic brightness of the display, while LCD display brightness is basically determined by the brightness of the LED backlight[3], so it is incumbent on OLED material suppliers to constantly improve such materials to compete with LCD small panel displays. OLED RGB displays also have another issue in that the three OLED materials used to create colors do not age at the same rate. This can cause an effect called ‘burn-in’ that creates ‘ghost’ images of banners or other images that remain on the screen for an extended time, such as a logo on a news show.
But even with these issues, OLED displays have become popular enough to dominate the premium smartphone category and take a significant share of the total smartphone market, a bit over 40% depending on the source. We estimate that between 615m and 620m small panel OLED displays were shipped last year, up 20.8% over 2020 shipments and representing 45.7% of mobile device shipments based on our composite smartphone shipment totals, an increase from 39.6% in 2020. However much has been said recently about how Chinese small panel OLED display producers have been gaining ground against the incumbent leader, Samsung Display (pvt), and as the dominant supplier of small panel OLED displays, it is inevitable that SDC’s share of that market will be reduced as other producers ramp production capacity and develop the expertise needed to maintain acceptable yields.
We believe that SDC’s share of the composite[4] small panel OLED market decreased last year from 77.6% to 70.5%, although SDC’s unit volume increased over the same period by 9.8% while all other producers gained share and expanded unit volumes. As referenced below, there are both rigid and flexible OLED small panel displays in those numbers and a bit more granularity can be determined, especially as flexible small panel OLED displays carry higher ASPs, making them more lucrative for those that are generating high enough yields and utilization to remain profitable. Looking specifically at flexible small panel OLED displays only, there was more intense competition from suppliers and SDC’s share in 2021 declined to 56.9% from 68.3% in 2020, although again, SDC’s actual flexible small panel OLED shipments grew in 2021, despite the share loss.
The problem is scale, and while the flexible small panel OLED market saw a 28.2% increase in shipments in 2021, SDC’s growth was below overall industry growth because of its size. The same goes for the composite small panel OLED market shown in Figure 6 and follows in the rigid small panel OLED category also, where SDC has an even bigger share (83.7% in 2021 down from 88.0% in 2020). Samsung has the choice of further expanding small panel OLED capacity to continue to maintain share, or concentrate on higher value small panel OLED products. A continued domination of small panel flexible OLED products would seem to be the proper goal, but SDC has taken it one step further and has become the dominant force in foldable OLED displays, which carry an even higher price premium than flexible small panel OLED displays, which tells us that SDC’s advanced planning for small panel OLED tends to be far ahead of most others. Of course, it is easier to make such decisions when you are as large as SDC and have a parent who is among the top smartphone suppliers globally, but SDC has to make such decisions in a vacuum and cannot anticipate how fast they will progress down the learning and profitability curve and whether their assumptions about small panel flexible OLED pricing are correct as to price and timing.
While others proclaim the loss of share as the end of the Samsung Display ‘era’ we point to the LCD large panel space where Chinese panel producers have built out significant capacity and now hold a dominant share of the large panel LCD market. While this was a good strategy for much of 2020 and part of 2021, we look at a longer-term view and expect that the small panel ‘generic’ flexible OLED market will become crowded more quickly than expected, and competition, even between Chinese producers will become even more intense. While SDC will lose more small panel flexible OLED in 2022, the real question is whether they will maintain profitability growth in a static pricing environment and whether that will hold true in a weak pricing environment. The idea is to make money, not wave a flag, so we are still on the side of the SDC philosophy, even if it means losing share.
[1] Example: Adding 2 more bits of information to each of three colors changes the possible color combinations from 16.777m possible color combinations to a staggering 1.073b color combinations.
[2] Contrast: The difference from the deepest black and the whitest white,
[3] Brightness in LCD RGB displays is also reduced by the color filter used to generate each colored sub-pixel.
[4] Both rigid and flexible small panel OLED displays.
Composite Small Panel OLED Unit Volume & Growth Rate - 2020 - 2021 - Source: SCMR LLC, Stone Ptrs, Samsung Display, Company Data
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