Omdia (IHS) - Page 9

IHS estimates that sales of mobile flexible AMOLED displays reached about $2 billion in Q2 2017 - more than double compared to Q2 2016 ($886 million).

Samsung still commands this market - IHS says that SDC had a market share of 98.3% in the second quarter. The second flexible OLED market is LG Display which is reportedly still struggling with yield and quality issues at its new E5 flexible OLED line and so has a low capacity. LGD will hopefully soon increase its capacity dramatically. Chinese OLED makers are now initiating flexible OLED production as well.

According to IHS, the OLED encapsulation material grew 4.7% in 2017 to reach $117 million. IHS expects the market to grow at a 16% CAGR to reach $233 by 2021.

The market growth rate will increase as new OLED fabs begin operation in China and Korea. IHS categorizes OLED encapsulation materials into metal, frit glass, TFE and hybrid. The metal type is mostly used for OLED TVs, in which IHS expects the fastest growth in terms of substrate size. Glass encapsulation will remain strong but will lose market share in the future.

According to IHS, sales of quantum-dot enhanced LCD TVs, or QLED TVs, dropped 48% in Q2 2017 compared to Q1 2017. Total sales in Q2 amounted to only 351,000 units - down from 671,000 in Q1 2017. OLED TV sales, meanwhile, increased from 29% from 212,000 units to 282,000 units.

Following this report, Business Korea speculates that Samsung Electronics may have to change its premium TV strategy, as it faces market share lose in this very important segment and may lose its leading position in the total TV market.

IHS estimates that flexible OLED production capacity is set to increase from 1.5 million square meters to 20.1 million square meters between 2016 and 2020. That's a compound annual growth rate of 91%!

IHS says that almost all new small-sized displays OLED capacity added in the future will be used to produce flexible OLEDs, which will grow the market share of flexible OLEDs for mobile applications from 28% today to 80% by 2020. In the years between 2016 to 2020, OLED producers in China, Korea and Japan will build the equivalent of 46 new flexible AMOLED fabs (each with 30,000 monthly substrates).

Analysts from IHS say that as AMOLED displays continue to replace LCD displays and the AMOLED market is growing quickly - the market for fine metal mask (FMM) components will also experience fast growth in coming years.

IHS sees the FMM market in 2017 generate $234 in revenues. The market will grow at a compound annual growth rate (CAGR) of 38% until 2022 - to reach $1.2 billion. IHS says that FMM production is a challenge and FMM technology has become a bottleneck as display resolution is increasing and the number of FMM suppliers is limited. The leading producer is Dai Nippon Printing, and the company's FMM masks are using to produce the majority of AMOLED displays.

IHS says that as production volumes of AMOLED panels increases the gap between OLEDs and LCDs narrow - in fact currently the price of a 5.5" HD AMOLED display ($12.1) is cheaper than an equivalent LTPS LCD ($12.2). The main cause of recent price reductions are lower depreciation costs and lower labor costs.

For higher-resolution displays, LCDs are still much cheaper than comparable OLEDs - IHS estimates that a 5.5" QHD LCD costs 30% less than a comparable AMOLED.

IHS says that AMOLED panel shipment will increase 63% in 2017, driven by strong demand from smartphone makers. Looking forward the AMOLED market will experience fast growth, as demand will rise for smartphones, TVs, VR HMDs and mobile PCs.

In 2017 the AMOLED market will reach $25.2 billion in revenues, up from about $15 billion in 2016. The OLED TV market will grow to 1.5 million units (up from from 890,000 units in 2016). Mobile display resolution continue to increase, and in 2017 68% of shipments will be of FHD, QHD and WQHD resolutions.

IHS says that OLED TV shipments will reach 10 million units in 2023, up from about 1.5 million in 2017. The OLED TV market will grow at a CAGR of 42% from 2017, but the growth will decelerate as can be seen in the chart below.

The high costs of producing OLED TV panels will remain a challenge and will be the main reason why production of OLED TV panels won't accelerate in the near future. Producers are looking into ink-jet printing as a way to lower production costs but the soluble emitting materials are still under performing and also the production yields are still low. IHS says that OLED makers are aiming to start mass printing OLED TV panels by 2019.

The Nikkei Asian Review says that its sources claim that Apple ordered 70 million 5.2" flexible OLED displays for its first OLED iPhone, that will be launched by the end of 2017. IHS estimates that SDC actually plant to produce 95 million OLEDs for Apple in 2017 as it expects higher demand from Apple.

This report follows several reports of Apple's OLED orders in the past years. In 2016 it was suggested that Apple paid $4.3 billion upfront to secure 100 million panels, and in February 2017 it was reported that Apple ordered an extra 60 million OLED panels from Samsung Display.

IHS says that demand for flexible OLED is sharply increasing and in Q3 2017 the company expects revenues of flexible OLEDs to surpass those of rigid OLEDs for the first time.

Flexible AMOLED revenues in Q3 will reach $3.2 billion while those of rigid (glass-based) OLEDs will reach $3 billion. Flexible AMOLED revenues will continue to climb throughout 2018 and reach about $4.5 billion in Q4 2018. Revenues of rigid OLEDs will actually start declining in 2017, according to IHS - which is a bit of a surprise, even if average panel price will decrease. Rigid OLED shipments is rising even from existing fabs as yields are improving.