DSCC Updates LCD and OLED Capacity Forecasts – Capacity Growth Shrinks on Market Conditions
With LCD TV panel prices falling below cash costs and losses mounting, it is no surprise that our display capacity forecast was revised downward by 6%. A number of panel suppliers are delaying, cancelling or down-sizing new LCD investments as well as downsizing or shutting down some existing capacity. At the same time, with the OLED TV technology roadmap not clear, a number of Chinese manufacturers are not yet ready to commit to new OLED TV panel fabs, resulting in an extended forecast where demand outpaces supply which would inevitably lead to shortages as the average TV size continues to growth. We do expect more next generation TV capacity to come online than we are showing to prevent these shortages which will either take the form of:
- New OLED capacity via WOLED, RGB IJP, QD-OLED, OVJP or some other approach;
- New LCD capacity as profitability returns;
- New capacity that is not LCD or OLED such as microLED, QLED, etc.
In any case, we reduced our 2025 display capacity forecast by 6% from 401M to 379M square meters and we now show just a 2.3% CAGR from 2019 to 2025 vs. 3.3% last quarter. LCD capacity was also reduced by 6% and can be primarily attributed to capacity downsizing at HKC H2 and H4, LGD P7 and P8, Sharp SIO and SDC T8. LCD capacity is now growing at just a 0.7% CAGR from 2019 to 2025 vs. 1.7% last quarter. OLED capacity was reduced by 4% and is now growing at a 19.0% CAGR vs. 19.2% last quarter. We removed LGD AP4/E6 Phase 3 and Visionox V2 Phase 2 from our forecasts which accounted for the difference.
Some of the other key highlights and changes include:
- Looking at total LCD vs. OLED capacity, we now show OLED reaching a 15% share in 2025 vs. a 14% share last quarter.
- As with last quarter, OLEDs should overtake LCDs on an unyielded basis in mobile capacity in 2020 and reach a 65% share in 2025.
- Flexible OLEDs should overtake rigid OLEDs in unyielded capacity in 2020 and should overtake LTPOS in 2023. From 2019-2025, flexible OLEDs are expected to grow at a 16% CAGR with mobile rigid OLEDs rising at a 2% CAGR and LTPS/oxide LCDs flat.
- With LCD TV fab investments slowing, the a-Si share of total backplane capacity will fall from 84% in 2019 to 77% in 2025. The oxide share will rise from 8% in 2019 to 12% in 2025 with LTPS/LTPO rising from 8% to 10%.
- By country in total display capacity, we now show China’s share reaching 60% from 2022 to 2025, with Korea’s share falling from 24% in 2019 to 15% in 2025 as it shuts down more LCD capacity than it adds or converts to OLEDs. Amazingly, China’s share of display capacity will be 4X higher than Korea’s from 2021. Looking at just LCDs, we show China’s capacity reaching 63% from 2023 with Korea’s share falling to just 8%.
- In OLEDs, on the other hand, we expect Korea to remain the leading region although its share will fall from 90% in 2018 to 55% in 2025. China’s OLED capacity growth from 2019 to 2025 is expected to be 38% vs. Korea at 11%.
- By glass size, G8.5/8.6 is expected to lead throughout the forecast, peaking at 54% in 2018 and falling to 46% in 2025 on flat growth from here as new capacity in China is offset by reduced capacity in Korea. G10.5 will rise from an 8% share to a 19% share in 2025 on a 17% CAGR and G6 will rise at a 4% CAGR with its share rising from 14% in 2019 to 16% in 2025.
- If we compare G7+ capacity growth with demand growth, we show 12%-13% supply growth per year in 2018-2019 outpacing demand growth and creating a large surplus. However, from 2020, we show demand growth of 2% - 5% per year outpacing supply growth of -1% to +2%. This will inevitably lead to shortages and eventually new spending from LCDs, OLEDs, microLEDs or another technology.
- In terms of OLED capacity by glass size, G6 is expected to lead with a 36% - 43% share from 2018-2025 on a 17.5% CAGR. G8.5 is expected to approach G6 in 2021 and 2022 on LGD’s investment in China and will enjoy a 25% CAGR. G10.5 is expected to a surge to a 13% share in 2025 on investments by LGD and SDC.
- By manufacturer, BOE is expected to become the #1 supplier on a capacity basis in 2019 and widen its advantage over LG and Samsung on significantly faster growth with BOE growing at a 6% CAGR from 2019-2025 and LG Display and SDC falling at -3.2% and -4.5% CAGR. BOE’s share will grow from 16.2% in 2018 to 22.9% in 2025 while LGD’s and SDC’s shares fall from 18% and 17% respectively in 2018 to 12% and 9% in 2025. China Star is expected to overtake LGD, SDC and Innolux to reach #2 from 2022 with a 12% share in 2025 on a 9% CAGR. In LCDs, BOE overtakes LG Display for the #1 position in 2019 and is expected to widen its advantage over LGD and SDC growing at a 5% CAGR while LGD shrinks at a -9% CAGR and SDC declines at a -12% CAGR. China Star is expected to become #2 in LCDs from 2023 on the strength of its G10.5 investments.
- In total OLED capacity on an area basis, LG Display is expected to overtake SDC in 2021 on the strength of its new WOLED fab in China. SDC is expected to regain the top spot in 2025 on new mobile and TV investments. LGD’s OLED capacity is expected to rise at a 19% CAGR vs. SDC at 12%. BOE is expected to maintain #3 with a 15% share and a 35% CAGR.
- In just mobile OLED capacity, Samsung will maintain a dominant position throughout the forecast, with its share not falling below 50% until 2022. BOE is expected to overtake LGD in 2019 for #2 as LGD has shut down some G4.5 capacity while BOE expands. Visionox is expected to overtake LGD for #3 in 2022 with China Star overtaking them in 2023 and Tianma overtaking them in 2024.
- In unyielded flexible OLED capacity, SDC’s advantage shrinks considerably as its rigid mobile OLED capacity is excluded, its 2018-2021 investments are minimal and it will shrink its existing flexible OLED capacity by conversions to Y-OCTA and LTPO. However, it is still expected to keep the lead through 2025 helped by its A5 mobile investments bosting 2023 and 2024 capacity. BOE is expected to grow at a 31% CAGR from 2019-2025 vs. SDC at 4%. Visionox is expected to overtake LGD in 2022 with China Star overtaking LGD in 2023 and Tianma overtaking them in 2025.
Finally, in terms of internal capacity that is OLED, the Korean suppliers SDC and LCD are leading in the transition to OLED with SDC expected to reach a 52% share in 2025 with LGD at 40% as they shut down unprofitable LCD capacity and convert to or open new OLED fabs. In China, mobile market leader Tianma is expected to rapidly migrate to OLEDs with OLEDs accounting for 34% of its 2025 capacity. TV market leaders BOE and China Star are expected to behind the curve in OLED capacity with OLEDs accounting for just 10% and 8% of their total capacity respectively in 2025.
For more information on this report with contains unique capacity and equipment spending pivot tables, please contact Gerry McGinley at firstname.lastname@example.org or your local DSCC representative.