DSCC TV Cost Report Provides Scorecard for LCD vs. OLED, China vs. Korea
DSCC has released its Q2 2020 update of our Advanced TV Display Cost Report, with updates to all of the OLED and LCD cost outlines plus several new product and manufacturing configurations, including 48”/77” MMG and 55”/65” MMG OLED in China, 55” and 65” 120Hz LCD, and six different 8K TV models in LCD and OLED.
The cost report provides detailed cost profiles of 57 distinct LCD products, including combinations of screen size, refresh frequency (60Hz/120Hz), backlight (conventional / QDEF), gen size and manufacturing location (Korea / China). and 46 distinct OLED products, ranging in size from 48” to 88”, with resolutions from FHD to 8K, and manufactured on Gen 8.5 and Gen 10.5 in China and Korea.
We anticipate that LGD will introduce a 48” UHD TV panel later this year, to be made at its Gen 8.5 plant in China. The 48” size panels can be efficiently made with an 8-cut on the Gen 8.5 substrates, but also in an MMG configuration with 77” panels, as 2-up 77” plus 2-up 48”. The cost profile of the 48” UHD OLED panel is shown in the first two charts here, first as 8-up and then as MMG. Because the 8-up configuration is efficient and simple, we find that the 48” cost is about 8% higher under MMG. Nevertheless, LGD plans only limited quantities of 48” coming mostly from MMG, because it provides a bigger 15% cost reduction for 77” panels.
48” UHD OLED TV Panel Production Cost, 2020-2024
48” UHD OLED TV Panel Production Cost with MMG, 2020-2024
LGD faces a similar situation with MMG in 55”/65” sizes. These two panels can be made in an MMG configuration with 3-up 65” plus 2-up 55” on a single substrate. The smaller 55” size is an efficient 6-up on the Gen 8.5 lines, so the MMG cost is higher, but in this case the cost penalty in 55” is only about 2%, while the advantage for 65” in using MMG production compared to an inefficient 3-up is a roughly 20% improvement in cost.
The Q2 update of this report includes updates for utilization and yields on both the Korea and China lines, and a comparison of W-OLED costs between Korea and China. We estimate that because of lower yields on the China lines, total costs in 2020 for China production of OLED TV panels are about 12% higher than the corresponding costs for Korea production. By next year, though, we expect that the China lines will be able to improve their yields to narrow the gap with Korea, and the advantage in China of lower costs for depreciation, personnel, indirect costs and SG&A will allow LGD to achieve lower total costs from China production.
In LCD, we show the competitive situation between Korea and China, and the report makes clear why the Korean panel makers are exiting the LCD TV panel business, as shown on the next chart which compares LCD Open Cell cost for various panels in 2020 made in China and Korea. While LCD TV panels are unprofitable in 2020 everywhere, the industry oversupply has brought LCD TV panel prices down below cash costs in Korea, while China fabs with lower overall costs which include substantial depreciation have a cash cost position substantially lower. China fabs can generate a small cash margin on LCD TV panels at 2020 prices.
LCD Open Cell Panel Cost – Korea vs. China
The report gives a comparison of LCD TV panel costs in the Open Cell configuration common throughout the industry, and also in a full module configuration including backlight. The report gives a comparison between LCD with a conventional backlight and LCD with Quantum Dot Enhancement Film (QDEF), used in hig-end LCD TVs by Samsung, TCL, and others. While both conventional and QDEF panels have prices below cost, QDEF panels are closer to profitability today, and in some cases will become profitable in 2022 when China Gen 8.5 fabs line depreciation ends. For 55” panels, we find that although QDEF panel costs are 4-6% higher, QDEF prices are 11-15% higher, and while the numbers are different a similar pattern is found in 65”.
Finally, the report allows a comparison of the competing products in the LCD and OLED camps, as shown in the last two charts here which show 65” UHD OLED made with MMG on Gen 8.5 in China compared against 65” 8K QDEF LCD made on Gen 10.5 in China. These two products represent the likely battleground between LCD and OLED, as LCD’s response to the threat of OLED includes both QDEF and 8K. The cost advantage of 8K LCD is amounts to 50% in 2020, and although that is artificially high because of poor yields for China OLED, a substantial gap remains, and we expect the cost for 8K QDEF LCD to remain 30% lower than W-OLED in 2024.
65” UHD OLED TV Panel Production Cost with MMG, 2020-2024
65” 8K 120Hz QDEF LCD TV Panel Production Cost on Gen 10.5, 2018-2024
As noted above, subscribers to the Advanced TV Cost Report receive cost profiles of all major product configurations competing in the premium TV space in both LCD and OLED. The report includes Excel files with the detailed cost models in tables and in graphical form, and a Powerpoint which outlines the main findings of this quarter’s update. The Powerpoint includes comparisons of competing technologies (such as WOLED vs. Inkjet Printing, or LCD vs QDEF) and differing manufacturing platforms (Korea vs. China, Gen 8.5 vs. Gen 10.5). DSCC Weekly Review readers interested in subscribing to the Advanced TV Cost Report should contact firstname.lastname@example.org.