BOE Preparing to Make Rigid OLED Notebook Panels on Flexible OLED Line
Prior to COVID-19, DSCC had forecasted OLED notebook panels to surge from 0.5M units in 2019 to nearly 3M units in 2020. This is a 490% growth rate and Samsung is accounting for 99% of these panels. In addition, 99% of these panels are rigid OLEDs. Although notebook PC OEMs might enjoy the benefit of the thin and light form factor that flexible OLEDs offer, they are too expensive today to include in notebook PCs other than in high priced foldable notebooks.
So, with the OLED notebook market growing rapidly, how does BOE respond? BOE wants to be a leader in OLEDs, but they only have 3K G5.5 substrates per month of rigid OLED capacity. So, BOE is expected to produce rigid OLEDs on one of their flexible OLED lines. This effort is expected to start mass production in 2021. There is relatively little modification required to do this actually. They just eliminate the process steps associated with the PI coating and curing steps and the laser lift off (LLO) step. The LLO step has been a major source of yield loss for some OLED manufacturers. Some companies are still buying LLO tools that lift off a few cells at a time rather than the entire ½ G6 substrate. In terms of encapsulation, flexible OLED manufacturers are likely to encapsulate the rigid OLEDs using thin film encapsulation (TFE) producing a thinner and lighter rigid OLED rather than adding to capex and buying glass encapsulation equipment. We believe customers will pay a premium for rigid OLEDs with TFE vs. conventional rigid OLEDs due to the reduced thickness and weight. There may also be some small modifications in the module process, but we would expect to see those anyways for notebook sized panels.
It is our understanding that BOE will initially produce rigid OLED notebook panels at their B11 fab in Mianyang as B7 is seeing higher utilization producing flexible OLED smartphone panels for Huawei and others fueled by 5G demand and lower pricing than SDC. B11 is also adding more capacity and can use more business. Eventually, DSCC China analyst Rita Li expects notebook panel production to shift to B12 when that fab starts production.
BOE is developing the following rigid OLED notebook panels which they plan to produce on their flexible OLED lines:
- 14.0” 4K, targeting 400 nits
- 15.6” 4K, targeting 500 nits
- 17.3” 4K, targeting 500 nits
These panels are expected to be rigid + TFE. They will start at 60Hz and then migrate to 120Hz likely adding LTPO after it is developed for smartphones. They are looking at even faster refresh rates beyond 120Hz as these panels will be positioned for the gaming market which demands high refresh.
The biggest challenge for OLEDs in notebooks is likely power consumption given the all-white screens used in MS Office applications. BOE is targeting significant power consumption reductions annually after starting from ~4W.
So, we expect to see rigid OLED panels made on flexible OLED lines. It is a win/win for the customer and the supplier. The customer gets thin and light rigid panels due to TFE that rigid fabs don’t have, they don’t have to pay as much as a flexible OLED panel due to the elimination of cost/yield loss from the PI and LLO steps and they get more sources of supply. The panel supplier gets higher yields, lower costs, higher utilization and higher revenues.
Will this happen in other applications? We can see this happening in tablets and automotive as well at companies which lack rigid OLED capacity or companies who are struggling with LLO in these applications. Larger panels are likely to create more challenges in LLO which is why some companies are still buying cell-based LLO equipment. For companies struggling with LLO, eliminating this step can make a real difference in yields and costs.
Will we see it in smartphones? Likely not at this point due to SDC’s huge advantage in scale and cost in rigid smartphone OLEDs helped by full depreciation of their fabs. In addition, LCDs are an even lower cost alternative and multi-sourcing LCDs is not an issue. Rigid OLED smartphones are mature products, the growth for smartphones is in flexible OLED smartphones. However, in other applications which don’t need flexible displays and in companies that only have flexible capacity, it makes perfect sense to produce thin and light rigid panels on flexible lines.