Samsung LCD Fab Conversion Update
On Tuesday we noted that Samsung Display (pvt) had decided to undertake the conversion of its Gen 7 fab in Asan, South Korea from LCD to OLED as part of its overall plan to end production of large panel LCD displays. The fab, known as L7-2, has been rumored to be the primary candidate for a technology change and some or all of the equipment has been offered for sale. As we noted, a contract was let with YMC (155650.KS) through Samsung Construction & Trading (028260.KS), a major affiliate of the Samsung Group (pvt), that extended through July 20 ($18.5m) to open the fab floor space. The project, which is expected to cost ~$1b, will create a 15,000 sheet/month OLED line with expansion capabilities to be decided later this year.
We noted earlier that we expect production to begin for phase 1 of the A4E project to be completed by 9/22, a bit earlier than our original; projection of 3/2023, but we are keeping that schedule as tentative, given issues surrounding equipment availability and logistics due to COVID-19 in Asia. The phase 2 expansion, which we project will be completed between 9/23 and 3/24 is also tentative, but thus far adheres to the timetable set by the phase 1 conversion.
We have received conflicting information concerning whether Samsung will develop additional LTPS backplane capacity for A4E, with some indicating that the loss of LTPS capacity at Samsung’s A3 fab, which saw capacity conversion to LTPO backplane technology for Apple (AAPL), will be made up at A4E, while others point to less of a need for LTPS as LTPO becomes more popular.
We still expect Samsung to continue to produce large panel displays from its Gen 8.5 fab L8-2, but believe SDC intends to convert its L8-1 fab to OLED, under a $2b fab for OLED IT products, meaning notebook and monitor displays. As this line would be developed using RGB technology, similar to what Samsung currently uses for its small panel OLED production, the conversion would entail similar equipment to L7-2, however we expect the backplane will be IGZO, which could take a bit longer to stabilize than might be the case for other backplane technologies.
While we have heard that SDC has also been shopping the equipment in L8-1, there is speculation that SDC will keep the fab’s Gen 8 configuration, which would be a first for the company’s OLED production. That kind of decision would be based on the company’s expectations for the panel sizes it expects to be producing in the future, as substrate efficiency between Gen 6 and Gen 8.5 fabs can vary considerably as panel sizes increase. With ample space for additional capacity in this conversion, SDC has the option of expanding Gen 8.5 or adding Gen 6 capacity in the future.
While these are ambitious plans for SDC, given the display industry’s optimistic view, spurred on by higher panel prices, it is to be expected that this feeds the capacity decision process. While there is certainly competition to Samsung’s lead in small panel OLED production, they are still the leader and must maintain that lead by continuing to offer a wider variety of OLED products, as they are doing with OLED notebook and monitor panels and with foldable. While we expect final decisions on SDC’s QD/OLED project have yet to be made, they continue to make the necessary capex plans to support their leadership position in what would now be called the small and medium sized OLED panel domain.
We noted earlier that we expect production to begin for phase 1 of the A4E project to be completed by 9/22, a bit earlier than our original; projection of 3/2023, but we are keeping that schedule as tentative, given issues surrounding equipment availability and logistics due to COVID-19 in Asia. The phase 2 expansion, which we project will be completed between 9/23 and 3/24 is also tentative, but thus far adheres to the timetable set by the phase 1 conversion.
We have received conflicting information concerning whether Samsung will develop additional LTPS backplane capacity for A4E, with some indicating that the loss of LTPS capacity at Samsung’s A3 fab, which saw capacity conversion to LTPO backplane technology for Apple (AAPL), will be made up at A4E, while others point to less of a need for LTPS as LTPO becomes more popular.
We still expect Samsung to continue to produce large panel displays from its Gen 8.5 fab L8-2, but believe SDC intends to convert its L8-1 fab to OLED, under a $2b fab for OLED IT products, meaning notebook and monitor displays. As this line would be developed using RGB technology, similar to what Samsung currently uses for its small panel OLED production, the conversion would entail similar equipment to L7-2, however we expect the backplane will be IGZO, which could take a bit longer to stabilize than might be the case for other backplane technologies.
While we have heard that SDC has also been shopping the equipment in L8-1, there is speculation that SDC will keep the fab’s Gen 8 configuration, which would be a first for the company’s OLED production. That kind of decision would be based on the company’s expectations for the panel sizes it expects to be producing in the future, as substrate efficiency between Gen 6 and Gen 8.5 fabs can vary considerably as panel sizes increase. With ample space for additional capacity in this conversion, SDC has the option of expanding Gen 8.5 or adding Gen 6 capacity in the future.
While these are ambitious plans for SDC, given the display industry’s optimistic view, spurred on by higher panel prices, it is to be expected that this feeds the capacity decision process. While there is certainly competition to Samsung’s lead in small panel OLED production, they are still the leader and must maintain that lead by continuing to offer a wider variety of OLED products, as they are doing with OLED notebook and monitor panels and with foldable. While we expect final decisions on SDC’s QD/OLED project have yet to be made, they continue to make the necessary capex plans to support their leadership position in what would now be called the small and medium sized OLED panel domain.
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