Counterpoint - DSCC - Page 8

DSCC estimates that foldable OLED panel shipments will reach 3.1 million units in 2020, an increase of 454% from 2019. Revenues in 2020 will reach $462 million. DSCC decreased its estimates following the US restrictions on Huawei which prevented the launch of the Mate X2. The market will grow to 94 million panels by 2025 (a CAGR of 97% from 2018).

Samsung is clearly the leading foldable OLED device brand, with a market share of over 80% in the 2020. The two best selling smartphones in 2020 are the Samsung Galaxy Z Flip and the Z Fold 2.

DSCC says that OLED panel revenues will reach almost $12 billion in Q4 2020 - reaching an all-time high (up 46% from Q4 2019) as all the major OLED markets, smartphones, TVs and smartwatches, saw increased demand.

One of the major drivers for the increased Q4 demand was Apple's later-than-usual release date which pushed orders into Q4 from Q3, and an earlier Samsung S21 release which meant SDC started producing panels for Samsung Electronics's upcoming flagship as early as November. DSCC estimates that Apple will account for 57% of all OLED smartphone panel revenues in the quarter.

DSCC says that the high costs of microLED production will limit the adoption of microLED TVs, which are highly expensive, and the technology will remain in the niche of ultra large displays. The market is set to grow from around $25 million in 2020 to $228 million by 2026.

Just for comparison, six years after being commercialization, in 2019 OLED TV revenues were estimated at $2.5 billion.

DSCC estimates that it has increased its OLED equipment spending estimate for 2020-2023 by 11% compared to its previous outlook. DSCC now sees total OLED equipment spending reaching $45 billion. The increase was due to increased demand for LGD's mobile OLEDs and plans to increase capacity and CSoT's new $6.8 billion IJP OLED fab plans.

Interestingly DSCC also increased its LCD equipment spending estimate by 37% following three recently announced smaller expansion plans. In total for both LCDs and OLEDs, display equipment spending for 2020-2023 was upgraded by 9% vs. DSCC's last estimate to $38B.

DSCC says that the utilization rates at flexible OLED production lines have risen sharply in Q3 2020 - from around 40% to around 65% - mostly due to production for Apple's iPhones. A rise in Q3 utilization has also happened in past years, for the same reason.

It is also interesting to note that OLED TV utilization rates are decreasing - part of the reason is that LG's OLED fabs had limited capacity until now and operated at almost 100% rates, but as capacity increases LG is no longer capacity constrained.

Market research company DSCC updates its WOLED TV production cost estimates and forecasts. DSCC says that LG is improving the production at its 8.5-Gen production line in Guangzhou and by next year the cost of production in China will be lower than comparable production in Korea - by about 15%. One meaningful technology adopted in China is MMG which enables around 20% cost reduction.

DSCC also estimates that while MiniLED TVs are cheaper to produce compared to OLEDs, the gap is less than 10%, which means that retail prices of MiniLEDs will be pretty much the same as the retail prices of OLED TVs.

DSCC says that the first half of 2020 has seen lower production at OLED fabs, due to normal season-related weakness in combination with the COVID-10 pandemic. Utilization rates and production capacity, however, rebounded in Q3 and will continue to be higher in Q4 of 2020.

The main reason for the bounce of flexible OLED production in Q3 was due to new products by Apple, Samsung and other device makers. In fact flexible OLED production in 2020 was higher in all months of 2020, including the weak quarters. However rigid OLEDs have seen a large drop in 2020 which has risen slightly in Q3 and will continue to rise - but remain smaller than 2019.

DSCC says that the foldable/rollable smartphone market will be one of the fastest growing consumer electronics market - and sales of such smartphones will grow to $105 billion by 2025, in a CAGR of 80%.

The display area used in such devices will grow a 93% CAGR, to reach 1.2 million square meters by 2025. In terms of units, 74.4 million rollable/foldable smartphones will ship in 2025.

DSCC updated its OLED material market forecasts, seeing a lower growth ahead. DSCC says the AMOLED stack material market will grow from $928 million in 2019 to $2.06 billion in 2024 in a CAGR of 17%. Only a couple of months ago DSCC estimated that the market in 2024 will reach $2.69 billion - and even these were reduced from earlier estimates due to COVID-19.

DSCC says that the main reason behind the reduction in its forecast is lower OLED TV capacity. The company now expects a slower ramp up at the Guangzhou fab, and LG's P-10 10.5-Gen fab is now removed from the forecast period.

DSCC posted an interesting article detailing their estimates for the production costs and prices of choice flexible and foldable AMOLED displays, in China and in Korea.

We'll start with the chart above, which compares the prices and quotes of several flexible OLEDs produced by Samsung in Korea. DSCC says that as the profitability of Samsung's OLED business is highly dependent on fab utilization, it is currently losing money on this business as the yields in its flexible OLED lines are only 38% - and fixed costs such as personnel and depreciation cannot be decreased. Having said that, DSCC sees higher utilization in the next two quarters, which will result in profitability for SDC's OLED unit.