QD/OLED Update
Samsung Display (pvt), the display production arm of Samsung Electronics, undertook a major step in 2019 when it decided to end production of large LCD panels. The decision was predicated on the price of large panels, which had been falling precipitously, and competition from Chinese LCD producers, who were both gaining production expertise and were undercutting SDC’s panel pricing in order to capture market share, which was enabled by government subsidies. While some of those plans were implemented, with both the sale of the company’s Suzhou, China fab to TCL (000100.CH) through its Chinastar (pvt) subsidiary, and as we have noted, has converted some of its former LCD large panel capacity to OLED, with only one Gen 8.5 fab still producing panels in Korea.
SDC is the leader in small panel OLED production but without a large panel LCD product, the company had no way to capitalize on the popularity of large panel TVs, so it embarked on a project to develop a new technology that is based on a combination of both OLED and quantum dots, a technology that parent Samsung Electronics has championed for years. The path toward developing a new display technology has not been an easy one, and as SDC closes more LCD capacity and converts to OLED, the pressure to be successful in developing a new large panel TV oriented display technology has increased and parent Samsung Electronics has not always been in complete support of the project.
That said, Samsung LSI, the foundry arm of Samsung Electronics, is said to have begun to produce timing controllers designed specifically for QD/OLED displays, which will give SDC TCON engineering samples that can be used to produce prototypes of actual QD/OLED TVs and monitors. The TCON samples are for 4K and 8K TVs and a QD/OLED monitor product, which SDC is planning to send to potential customers this month. SDC had previously sent QD/OLED samples to potential customers, but they were raw panels which were to be evaluated for quality and were not meant to be tested as complete modules. If these module samples are approved, the TCONs will be modified to remove any issues that were discovered during customer testing and final production TCONs would be delivered to SDC, who can then begin to build out mass production.
Of course, there are a lot of hurdles that must be met, both from an engineering standpoint and from a customer perspective as potential customers parent Samsung Electronics and Sony (SNE) have to give final approval, which is not only hinged on the quality of the device, but also SDC’s ability to produce them in quantity and at a reasonable price. SDC’s QD/OLED line has a potential capacity for 30,000 sheets/month but yield will be the determining factor. Such a new process will likely begin with very low yields, which will generate a high product cost. SDC has the option to absorb much of the high cost and price the units at a point at which they become attractive to customers, but that also generates significant operating losses. SDC must make a decision as to whether to begin full production based on their expectations for improving yields, which for a new process technology is very hard to predict, and that decision is predicated on whether potential customers are willing to purchase the new displays altogether.
While SDC is part of Samsung Electronics overall, Samsung’s TV division makes its own decisions and has the option of passing on the entire QD/OLED project, so while the fact that Samsung LSI is willing to use some of its capacity to develop and produce timing controllers specifically designed for the QD/OLED project is a positive, it does not ensure that the project will be a success, something that will not likely be decided until the end of this year. Sony is certainly a viable customer but also faces the same pricing issues that the Samsung TV division faces. That said, if SDC gets the final OK from its parent, at full capacity, it could produce just over 1m 65” TV panels/year at 100% yield, which would obviously not be the case. An optimistic projection would be closer to 570,000 units in the first year of production, using only 65” panels. A mix including smaller monitor panels would increase that number and a mix including larger (70”+), would lower the unit count.
SDC is the leader in small panel OLED production but without a large panel LCD product, the company had no way to capitalize on the popularity of large panel TVs, so it embarked on a project to develop a new technology that is based on a combination of both OLED and quantum dots, a technology that parent Samsung Electronics has championed for years. The path toward developing a new display technology has not been an easy one, and as SDC closes more LCD capacity and converts to OLED, the pressure to be successful in developing a new large panel TV oriented display technology has increased and parent Samsung Electronics has not always been in complete support of the project.
That said, Samsung LSI, the foundry arm of Samsung Electronics, is said to have begun to produce timing controllers designed specifically for QD/OLED displays, which will give SDC TCON engineering samples that can be used to produce prototypes of actual QD/OLED TVs and monitors. The TCON samples are for 4K and 8K TVs and a QD/OLED monitor product, which SDC is planning to send to potential customers this month. SDC had previously sent QD/OLED samples to potential customers, but they were raw panels which were to be evaluated for quality and were not meant to be tested as complete modules. If these module samples are approved, the TCONs will be modified to remove any issues that were discovered during customer testing and final production TCONs would be delivered to SDC, who can then begin to build out mass production.
Of course, there are a lot of hurdles that must be met, both from an engineering standpoint and from a customer perspective as potential customers parent Samsung Electronics and Sony (SNE) have to give final approval, which is not only hinged on the quality of the device, but also SDC’s ability to produce them in quantity and at a reasonable price. SDC’s QD/OLED line has a potential capacity for 30,000 sheets/month but yield will be the determining factor. Such a new process will likely begin with very low yields, which will generate a high product cost. SDC has the option to absorb much of the high cost and price the units at a point at which they become attractive to customers, but that also generates significant operating losses. SDC must make a decision as to whether to begin full production based on their expectations for improving yields, which for a new process technology is very hard to predict, and that decision is predicated on whether potential customers are willing to purchase the new displays altogether.
While SDC is part of Samsung Electronics overall, Samsung’s TV division makes its own decisions and has the option of passing on the entire QD/OLED project, so while the fact that Samsung LSI is willing to use some of its capacity to develop and produce timing controllers specifically designed for the QD/OLED project is a positive, it does not ensure that the project will be a success, something that will not likely be decided until the end of this year. Sony is certainly a viable customer but also faces the same pricing issues that the Samsung TV division faces. That said, if SDC gets the final OK from its parent, at full capacity, it could produce just over 1m 65” TV panels/year at 100% yield, which would obviously not be the case. An optimistic projection would be closer to 570,000 units in the first year of production, using only 65” panels. A mix including smaller monitor panels would increase that number and a mix including larger (70”+), would lower the unit count.
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