Taking a Shot
As we have noted previously, Samsung Display (pvt) has made a bet on a new display process using both quantum dots and OLED materials. The QD/OLED process would coat a substrate with a blue OLED emitter and use quantum dots to shift the blue color to red and green to produce RGB pixels. By shifting the blue light, the concept would avoid a color filter, with is currently used in OLED TVs and reduces the intensity of each sub-pixel by filtering out other colors. Quantum dots however ‘shift’ rather than filter the light and change the color at a higher efficiency level. SDC has also been examining a path that substitutes quantum dot nano-rods for the blue OLED material, and converting the nano-rod blue color to RGB with QDs.
Samsung Display is expected to start QD/OLED (or some variant) by the end of this year and has delivered sample product to parent Samsung Electronics (005930.KS) and Sony (SNE), potential customers for a commercial product, and while actual production in 2022 is expected to be relatively limited, SDC is expected to build out its QD/OLED production capacity next year in its Q1 fab in Korea, as other brands have expressed interest in the potential product. The risk to SDC is substantial as there has been some controversy as to whether Samsung Electronics is on board with the technology, but SDC must eventually be able to produce large panel displays using some form of non-LCD technology to maintain its status as a major panel producer. Without large panel production, SDC would be left to the vagaries of the small panel OLED market with a side business of OLED IT panels, so it is imperative that SDC find a viable large panel product to replace the LCD assets it has sold or idled.
Behind SDC’s risk issues also lies establishing a supply chain for the QD/OLED product, which entails convincing support companies to build out capacity to meet potential demand for QD/OLED. Given the early stage of SDC’s QD/OLED product, one would expect this to be a difficult task given that SDC cannot provide an absolute guarantee that the product will be adopted by brands and if so, at what volumes, but that does not seem to have deterred CU-Tech (376290.KS), a supplier of PC boards, who announced last night that it will build 5 new production lines dedicated to SDC’s QD/OLED displays. The company said it will build three of those lines in 2023 and two more in 2024, which is specific enough to assume that they have been in discussion with SDC as to a potential capacity expansion timeline. According to management, when the five lines are completed, they will be able to produce ~600,000 units/month consisting of two source boards and a controller board.
This would indicate that SDC has estimated a production run rate of between 7m and 7.2m QD/OLED units in 2024, an optimistic view three years out, considering that an un-yielded 30,000 sheet/month line would be capable of producing ~ 1m 65” units/year. The implication would be that SDC would have to build out a full 45,000 sheet line twice a year through 2024 and run the combined operation at 80% yield in order to generate enough units. That is a tall order even for Samsung Display, especially with little actual mass production cost data on which to rely. That said, SDC has always taken risks when it comes to new technology, so while this is a big step to take on its own, we wouldn’t put it past SDC to make such a commitment.
Samsung Display is expected to start QD/OLED (or some variant) by the end of this year and has delivered sample product to parent Samsung Electronics (005930.KS) and Sony (SNE), potential customers for a commercial product, and while actual production in 2022 is expected to be relatively limited, SDC is expected to build out its QD/OLED production capacity next year in its Q1 fab in Korea, as other brands have expressed interest in the potential product. The risk to SDC is substantial as there has been some controversy as to whether Samsung Electronics is on board with the technology, but SDC must eventually be able to produce large panel displays using some form of non-LCD technology to maintain its status as a major panel producer. Without large panel production, SDC would be left to the vagaries of the small panel OLED market with a side business of OLED IT panels, so it is imperative that SDC find a viable large panel product to replace the LCD assets it has sold or idled.
Behind SDC’s risk issues also lies establishing a supply chain for the QD/OLED product, which entails convincing support companies to build out capacity to meet potential demand for QD/OLED. Given the early stage of SDC’s QD/OLED product, one would expect this to be a difficult task given that SDC cannot provide an absolute guarantee that the product will be adopted by brands and if so, at what volumes, but that does not seem to have deterred CU-Tech (376290.KS), a supplier of PC boards, who announced last night that it will build 5 new production lines dedicated to SDC’s QD/OLED displays. The company said it will build three of those lines in 2023 and two more in 2024, which is specific enough to assume that they have been in discussion with SDC as to a potential capacity expansion timeline. According to management, when the five lines are completed, they will be able to produce ~600,000 units/month consisting of two source boards and a controller board.
This would indicate that SDC has estimated a production run rate of between 7m and 7.2m QD/OLED units in 2024, an optimistic view three years out, considering that an un-yielded 30,000 sheet/month line would be capable of producing ~ 1m 65” units/year. The implication would be that SDC would have to build out a full 45,000 sheet line twice a year through 2024 and run the combined operation at 80% yield in order to generate enough units. That is a tall order even for Samsung Display, especially with little actual mass production cost data on which to rely. That said, SDC has always taken risks when it comes to new technology, so while this is a big step to take on its own, we wouldn’t put it past SDC to make such a commitment.
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