When the news this week hit on President Trump’s tweets about raising tariffs on $300 billion in imports from China, I knew it deserved mention in this blog. I have been saying for quite some time about the US-China trade war that “it will get worse before it gets better”, and up to now I’ve been right. The latest round will be implemented on September 1st unless the US and China reach a deal before then, which I think is unlikely.
Reuters reported this week that Foxconn is in discussions to appoint banks to find a buyer for its LCD factory that is being built in Guangzhou. While Foxconn replied in a written statement that “As a matter of company policy, Foxconn does not respond to market rumors or speculation,” Reuters reported that multiple contacts within Foxconn were involved in the discussion. If true, the sale of such a new plant would be unprecedented in the flat panel display industry.
During the 2019 UDE in Shanghai this week, TV brands demonstrated their TV products with two major mainstream technology camps covering OLED TV and 8k QLED TV. In addition to its line of OLED TVs, Hisense launched the first TV with BOE’s 65” dual cell TV panel, the U9E model. Hisense plans to sell U9E at CNY 17,999 (~$2600), CNY6,000 less than their 65” OLED TV. The U9E thickness is ~13mm, but OLED TV can achieve 4mm. Hisense claimed that the BD Cell TV exceeded the peak brightness, color gamut, color accuracy and HDR certification requirements of OLED TVs.
Sales for OLED stack materials for all applications are expected to grow at a 17% annual CAGR from $1.04 billion in 2018 to exceed $2 billion in 2022 and reach $2.28 billion in 2023, according to the latest update of DSCC’s Quarterly OLED Material Report, written in cooperation with the OLED Association. The report details all aspects of OLED materials, including multiple applications, supplier matrices, and cost comparisons.
Nameplate or unyielded capacity is the most common, but often least useful way to look at OLED capacity. In LCDs, it is more acceptable to focus on unyielded capacity as yields are in a relatively tight range. However, in OLEDs, yields span a wide range. So, yielded capacity is a better snapshot of a company’s production capability.
In DSCC’s Quarterly Display Supply Chain Financial Health Report, we analyze and compare all publicly traded display equipment suppliers’ financial results and include insights from our Quarterly Display Capex Report where appropriate. As revealed in the latest issue, Nikon jumped from #3 to #1 in Q1’19 in display equipment supplier revenues on the strength of recognizing six G10.5 litho tools, which are the most expensive tools in TFT backplane fabs by a significant margin. Nikon enjoyed 6% Q/Q and 13% Y/Y growth to $398M in display equipment revenues in Q1’19, while many of its other competitors saw declines. We expect Nikon to lead in litho equipment revenues in 2019 with a 68% to 32% revenue share advantage over Canon in the $2.1B display litho market. Nikon is expected to have an 84% revenue share in LCDs and a 17% share in OLEDs. Litho market share is forecasted out to 2023 in DSCC’s Quarterly Display Capex and Equipment Service.
Foxconn this week submitted plans for construction of its first major manufacturing facility at its Wisconn Valley complex and received a recommendation for approval by the Mount Pleasant village Plan Commission. The company also saw a leadership change this week, with Chairman Terry Gou stepping down to focus on his campaign for President in Taiwan.
Corning held an Investor Day event in New York City on Friday, June 14th, and rolled out new strategic targets for the corporation, but the most important development of the day for the display industry was given by an executive who was not present. Corning’s John Zhang, Senior Vice President and General Manager of Corning Display Technologies, appeared in a video feed to announce that Corning will build two new Gen 10.5 glass plants in the coming year, in Guangzhou and Wuhan, China. While Corning did not discuss the clients for these plants, we know that the Guangzhou plant will be supplying Foxconn’s plant in that city, and the Wuhan plant will supply BOE’s second Gen 10.5 plant there.
I recently finished our Q2’19 Quarterly Display Capex and Equipment Service Report which was expanded by 21 additional categories this quarter to 64 different equipment segments as mentioned at https://bit.ly/2XAUnuV. However, there were a number of other additional deliverables and highlights.
DSCC has updated its Quarterly OLED and Mobile LCD Fab Utilization Report with results for May and the latest estimates for June. As shown in the chart here:
Source: DSCC Quarterly OLED and Mobile LCD Fab Utilization Report
DSCC announces the arrival of our latest report, the Quarterly All Display Fab Utilization Report, available immediately. With many equipment and materials suppliers’ financial results directly related to panel suppliers’ fab utilization, we developed this service to help companies, industry analysts and financial analysts assess the impact of flat panel display suppliers’ fab utilization on company performance and the industry outlook.
We’ve seen a few developments on the Foxconn – Wisconsin project in the last few weeks. Here’s an update of the latest:
Sony held its Investor Relations Day this week in Tokyo, Japan, and the company is riding high, with earnings in its most recent fiscal year (FY 2018 ended March 31, 2019) nearly doubling to ¥916 billion ($8.2 billion) and improvements in multiple businesses. The vast conglomerate has a wide range of businesses, but for DSCC Weekly Review readers we will focus on the display-related Home Entertainment and Mobile Communications segments, which followed presentations for Sony’s Game & Network Services (PlayStation), Music, and Pictures segments.
Q4’18 equipment supplier financial data is often not released until the last day of March in Korea which causes a delay in releasing our aggregated look at quarterly results for equipment suppliers in our Quarterly Display Supply Chain Financial Health Report. So, finally, we have the financial data for 22 equipment companies covering company revenues, display equipment revenues, bookings, backlog and more. As shown below, it was a down quarter from record Q3’18 results for display capex, total display equipment spending and display equipment revenues for the 22 companies (21 after the merger between Wonik IPS and Wonik Tera) we follow.
We the long-awaited earnings releases of CPT and CEC Panda this week, we now have almost all the financial results of panel makers for Q4 2018, and we have compiled a comparison view as part of DSCC’s Quarterly Display Supply Chain Financial Health Report. The comparison highlights the dominant position of Samsung in terms of industry profits, as well as some of the challenges faced by the industry.
DSCC has updated its Quarterly OLED Shipment and Fab Utilization Report for Q1, and the report contains a treasure trove of data for analyzing and understanding the OLED industry, some of which we will share here. The report covers units, area, screen sizes, revenues and ASPs for eleven different applications of OLED panels, plus supply chain relationships for phones and TVs and fab utilization figures for OLED and LTPS LCD fabs.
Last month in the DSCC Weekly Review, we had discussed this report and described the Q4 2018 results and the full year 2019 forecast, and separately we reported on the update to fab utilization, so for this issue we will turn our attention to some of the quarterly data in our outlook for 2019 and on our long-term forecast. Our first chart covers OLED units shipments by application. While smartphone remains the dominant application (in unit terms) for OLED, Smart Watch has firmly established itself in the number two position, with nearly 15% of OLED units in Q4 2018 in this application. Smartphone and Smart Watch together make up 97% of OLED panel units.
Foxconn this week issued a press release announcing its intentions to break ground on manufacturing facilities at its complex in Mount Pleasant, Wisconsin, in what may have been an effort to deflect criticism that company efforts on the project are not progressing.
Foxconn said that the next phases of construction of its Wisconsin Valley Science and Technology Park in Racine County, Wisconsin “will begin by Summer 2019 and the facility will begin production in the 4th quarter of 2020.”
DSCC has distributed its latest capex and capacity forecasts to its Quarterly Display Capex and Equipment Service customers.
Some of the key highlights include:
As expected, Huawei announced its first foldable smartphone, which it calls the Mate X, on Sunday February 24th, the day before the Mobile World Congress (MWC) started. It is an outfolding design as you can see below which has 3 display configurations:
Samsung wisely got the jump on the rest of the smartphone industry by holding a product launch in San Francisco on February 20th, 5 days ahead of the Mobile World Congress (MWC) show which starts on February 25th in Barcelona. Called Samsung Unpacked, Samsung wanted to make sure it introduced its foldable smartphone before Huawei and others and also got all the media’s attention on its S10 launch.
OLED panel revenues will increase by 8% in 2019 to $28.6 billion, according to the latest update of the DSCC Quarterly OLED Shipment and Fab Utilization Report for Q1 2019, with double-digit growth in area and units, as OLED continues to take a larger share of smartphone and TV shipments.
The Q1 update of this report gives DSCC’s revised forecast for 2019 for eleven different applications for OLED panels, with detailed figures for units, revenue, area, average selling price (ASP), and other parameters with splits by application, panel supplier, substrate (rigid/flexible/foldable), and brand. The report also provides final figures for Q4’18 and for the full year 2018 with the same detail.
We have updated our monthly and quarterly OLED and Mobile LCD fab utilization data through March and distributed pivot tables and Powerpoint slides. This data includes:
The utilization data can be segmented by:
It was a record week after the Chinese Lunar New Year for Chinese display stocks with:
It was an unusual quarter for Samsung Display in that OLEDs suffered their largest Y/Y decline to date, while LCD margins improved significantly.
Samsung Display’s revenues fell 10% Q/Q and 20% Y/Y to $8.13B. The primary cause of the decline was a Q/Q double-digit reduction in rigid OLED smartphone panel shipments. Operating income fell a little faster than revenues, down 12% Q/Q and 33% Y/Y, due to a larger contribution from lower margin LCDs. Overall, operating margins remained flat at 11% due to a smaller contribution from low margin rigid OLEDs.
LG Display is usually the first flat panel maker to release earnings each quarter, and in many ways they have been a bellweather for the industry. They always give guidance on the upcoming quarter, and historically their guidance has not always been accurate. For Q4, though, LGD’s guidance given at the end of October was spot on, and included a phrase that captured the industry dynamic in Q4, and perhaps for some time to come.
In October, LGD said that they expected that panel ASPs will diverge by company, product, and size as company specific pricing and profitability affects the price (emphasis added). As we look at the results of the first three panel makers reporting Q4 results this week, that’s exactly what we’ve seen.
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