Samsung Commits to New OLED Fab
The CEO of Samsung Display (pvt), affiliate of Samsung Electronics (005930.KS), indicated that it will be building a Gen 8 OLED fab in its production complex in Asan, South Korea, designed for the production of IT OLED panels. As we have noted previously (8/16/21, 06/30/22,5/26/22), the construction of such a facility has been rumored, particularly as SDC has been developing specialized OLED deposition equipment with tool supplier Ulvac (6728.JP) that will help overcome the physical limitations that restrict the use of fine metal masks to Gen 6 OLED fabs. Fine metal masks are used to pattern OLED emitter materials on rigid or flexible substrates but begin to sag, causing defects, when they are used above Gen 6. The new process that SDC is developing places the deposition chamber and the masks vertically, rather than horizontally, keeping gravity from deforming the masks.
We expect the fab will be built in the L8 building, where SDC formerly had two large LCD fabs, producing up to 350,000 sheets/month at its peak, or the equivalent of 25.2m 55” LCD TV panels/year. SDC closed the first line in 2019, sold the equipment to Chinese LCD module producer Shenzhen Efonlong (pvt), and since built the production line for the company’s QD/OLED display products in that location. While no specific details about the new fab’s capacity were given, the company is expected to begin production on the new line in 2024, which will improve the efficiency of OLED panel production for IT products (monitors and notebooks), which are currently being produced on less efficient Gen 6 OLED fabs at SDC. This would coincide with Apple’s (AAPL) rumored plans to move the iPad from LCD to OLED displays in that year.
The OLED IT category is small relative to OLED smartphones, watches, and TVs, but represents a less competitive category and rapid growth. Current estimates see OLED monitor revenue growing from $57m last year to over $200m this year, although that includes QD/OLED and OLED notebooks growing almost 40% in sales y/y and over 60% in units. The chairman also indicated that SDC would be pursuing two forms of micro-displays, micro-OLED and micro-LED, neither of which comes as much of a surprise considering Samsung’s micro-LED commercial products are already available albeit at extremely high prices. The indication was that the company will be in mass production of micro-displays in the 2024 year along with the Gen 8 OLED IT line, which musts some significant milestones for SDC over the two years. While SDC management did not indicate the cost of these projects, the Gen 8 fab alone is estimated to cost between $2.3b and $3b, and we would expect that the OLED micro-displays would be produced on silicon, which would entail a dedicated production line.
All in, these are big projects but necessary for SDC to maintain its leadership role in the RGB OLED space and compete for micro-LED commercialization with Chinese panel producers, who have also been making such investments. While 2023 will be a year primarily dedicated to more traditional OLED products, which are increasingly influenced by macro factors, 2024 and 2025 will be years in which SDC is able to expand its display product line, particularly with new premium priced display products that will lessen its exposure to competition from Chinese panel producers. There are still a large number of roadblocks to overcome but it is nice to have the backing of one of the world’s largest CE companies when it comes to taking such chances.
We expect the fab will be built in the L8 building, where SDC formerly had two large LCD fabs, producing up to 350,000 sheets/month at its peak, or the equivalent of 25.2m 55” LCD TV panels/year. SDC closed the first line in 2019, sold the equipment to Chinese LCD module producer Shenzhen Efonlong (pvt), and since built the production line for the company’s QD/OLED display products in that location. While no specific details about the new fab’s capacity were given, the company is expected to begin production on the new line in 2024, which will improve the efficiency of OLED panel production for IT products (monitors and notebooks), which are currently being produced on less efficient Gen 6 OLED fabs at SDC. This would coincide with Apple’s (AAPL) rumored plans to move the iPad from LCD to OLED displays in that year.
The OLED IT category is small relative to OLED smartphones, watches, and TVs, but represents a less competitive category and rapid growth. Current estimates see OLED monitor revenue growing from $57m last year to over $200m this year, although that includes QD/OLED and OLED notebooks growing almost 40% in sales y/y and over 60% in units. The chairman also indicated that SDC would be pursuing two forms of micro-displays, micro-OLED and micro-LED, neither of which comes as much of a surprise considering Samsung’s micro-LED commercial products are already available albeit at extremely high prices. The indication was that the company will be in mass production of micro-displays in the 2024 year along with the Gen 8 OLED IT line, which musts some significant milestones for SDC over the two years. While SDC management did not indicate the cost of these projects, the Gen 8 fab alone is estimated to cost between $2.3b and $3b, and we would expect that the OLED micro-displays would be produced on silicon, which would entail a dedicated production line.
All in, these are big projects but necessary for SDC to maintain its leadership role in the RGB OLED space and compete for micro-LED commercialization with Chinese panel producers, who have also been making such investments. While 2023 will be a year primarily dedicated to more traditional OLED products, which are increasingly influenced by macro factors, 2024 and 2025 will be years in which SDC is able to expand its display product line, particularly with new premium priced display products that will lessen its exposure to competition from Chinese panel producers. There are still a large number of roadblocks to overcome but it is nice to have the backing of one of the world’s largest CE companies when it comes to taking such chances.
Samsung Asan Fab Complex - Source: SamMobile
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