In the latest issue of DSCC's Weekly Display Supply Chain Monitor, we discussed the outlook for 10.5G fabs. Here is an excerpt of that article dealing with the constraint of lithography systems which is expected to slow down the 10.5G ramps for the late comers.
With BOE, CSOT, Foxconn/Sharp, HKC and LG Display all having announced or expected to build 10.5G fabs, there is a tremendous amount of 10.5G capacity expected to be installed from mid-2017 to mid-2021. As shown in the table below, it could amount to as much as 600K 10.5G substrate per month input capacity. This works out to demand for 76-84 10.5G litho or exposure tools. However, there is only 1 litho tool supplier, Nikon, selling 10.5G systems as Canon has so far opted not to produce their tools at 10.5G as they anticipated a small market after losing the Sharp 10G business years ago. Due to the multiple, large projection lenses used in the Nikon 10.5G system and the precise lens matching and uniformity requirements, Nikon is only able to produce one of these systems per month. Thus, Nikon will only be able to produce approximately 48 systems over this 4-year period, with priority going to the companies who already submitted POs to the company. BOE has reportedly issued POs for 13 units with CSOT booking 8 units through the end of 2018. Nikon’s capacity constraints will limit how much and how fast Foxconn, HKC and LG can add capacity. In addition, it may also delay implementation of oxide and OLED capacity as oxide requires more litho tools due to more masks.
10.5G Fab Timing and Capacity
It is likely that Nikon will eventually invest to boost capacity to 1.5 – 2.0 units per month and Canon may be encouraged to scale its tool to 10.5G. However, scaling up its tool from 8.7G to 10.5G can take at least 12 months if not longer and invites additional risk. Meanwhile, we hear Canon is pushing its 8.7G tool which has been scaled up to 2300 x 2700mm. A number of companies are considering converting their 8.5G capacity to 8.7G or building a new 8.7G fab. With Sharp de-committing on 65” and other panels to Samsung, it is expected that LG will or has already signed an agreement with Samsung to build panels. We believe it will start shipping 43" and larger to Samsung as early as June. It will also help LG justify building its 10.5G fab sooner than later. In addition, the Sharp decision is also expected to cause Samsung Display to delay the termination of another of its older lines in order to secure production of 75" panels.
10.5G litho tools are not the only tools expected to be constrained in 2017. At the China OLED Summit on January 12-13, it was said that ELA lead times had been extended to 20-24 months and Tokki’s evaporation lead times were 16-18 months.