_Samsung selects material suppliers for Galaxy S8
According to the Korean press, Samsung Display (pvt) has selected the suppliers for its Galaxy S8 smartphone that will use a new stack of OLED materials[i], and while the company indicated that “matters relating to the new products cannot give (sic) out”, the replacement of a new OLED stack has produced efficacy improvements of between 15% and 30%. Samsung had decided not to implement the stack and material changes for the S7 as it had ample supply of those materials, which had been reduced to their lowest cost through cumulative volume discounts. New materials reset the volume discounts as indicated by Universal Display (OLED) the supplier of Samsung’s phosphorescent emitter materials, who lowered their guidance on the postponement of Samsung’s conversion from the old materials to new ones for the S7, which they had expected this year.
We note that under the current contract with Samsung, Universal Display is the exclusive supplier of phosphorescent OLED emitter materials to Samsung, which are indicated below under both ‘red’ and ‘green’. As a blue phosphorescent material is not available, Samsung Display and others use a blue phosphorescent emitter material, which is outside of the UDC contract and is supplied by Idemitsu Kosan (5019.JP). Interestingly, the green host material for the S7 was supplied by Samsung subsidiary Samsung SDI (006400.KS) who beat out the combined UDC and NSSMC (5401.JP)[ii] green host material that was being used in the S5/S6, but now seems to have lost to Japan’s NSSMC, although not in combination with Universal Display, who has seen their green host material business drop from a peak of $13.2m in 2Q 2014 to negligible amounts this year. The host business is highly competitive and has little of the IP protection seen in the emitter material business, and as such is subject to rigorous price/performance measures by Samsung Display.
While little change was expected for red and green emitter supplier Universal Display, as noted above, the new materials they will provide to Samsung starting early next year (our assumption) will boost material ASP’s as cumulative volume discounts reset to full price. As Samsung Display will be building more devices in 2018, we expect those discounts will triggered relatively quickly, especially for green emitter as it is used in greater quantities than red emitter. While it is hard to pinpoint such discounts, we would expect to see the first set of trigger points for red reached in late 3Q or early 4Q of 2017, and earlier for green should Samsung adopt the new OLED stack structure across much of its manufacturing line. The offset here is the potentially better material efficiency of the new stack, which could lead to lower material usage on a per device basis. All in, UDC should see a boost to material ASPs but will likely get less of an overall benefit from the increasing capacity and device volumes as Samsung Display’s material efficiency increases.
Source: etnews.com
[i] Current stack is called M7 – New stack will be M8
[ii] Nippon Steel & Sumitomo Metal Corp
We note that under the current contract with Samsung, Universal Display is the exclusive supplier of phosphorescent OLED emitter materials to Samsung, which are indicated below under both ‘red’ and ‘green’. As a blue phosphorescent material is not available, Samsung Display and others use a blue phosphorescent emitter material, which is outside of the UDC contract and is supplied by Idemitsu Kosan (5019.JP). Interestingly, the green host material for the S7 was supplied by Samsung subsidiary Samsung SDI (006400.KS) who beat out the combined UDC and NSSMC (5401.JP)[ii] green host material that was being used in the S5/S6, but now seems to have lost to Japan’s NSSMC, although not in combination with Universal Display, who has seen their green host material business drop from a peak of $13.2m in 2Q 2014 to negligible amounts this year. The host business is highly competitive and has little of the IP protection seen in the emitter material business, and as such is subject to rigorous price/performance measures by Samsung Display.
While little change was expected for red and green emitter supplier Universal Display, as noted above, the new materials they will provide to Samsung starting early next year (our assumption) will boost material ASP’s as cumulative volume discounts reset to full price. As Samsung Display will be building more devices in 2018, we expect those discounts will triggered relatively quickly, especially for green emitter as it is used in greater quantities than red emitter. While it is hard to pinpoint such discounts, we would expect to see the first set of trigger points for red reached in late 3Q or early 4Q of 2017, and earlier for green should Samsung adopt the new OLED stack structure across much of its manufacturing line. The offset here is the potentially better material efficiency of the new stack, which could lead to lower material usage on a per device basis. All in, UDC should see a boost to material ASPs but will likely get less of an overall benefit from the increasing capacity and device volumes as Samsung Display’s material efficiency increases.
Source: etnews.com
[i] Current stack is called M7 – New stack will be M8
[ii] Nippon Steel & Sumitomo Metal Corp
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