By Bob O’Brien
In cooperation with the Korean chapter of SID, DSCC organized a one-day Display Industry Forum at the 18th International Meeting on Information Display (IMID) conference last week in Busan, Korea. The conference brought many of the key players in the Korean part of the display industry and provided insights for industry professionals.
This was my first visit to Busan, and I found the city to be a pleasant surprise. A 2.5-hour high-speed train ride from Seoul, Busan is Korea’s second largest city with about 3.5 million people. It boasts a bustling container port, but also a lively waterfront and (so I was told) Korea’s most famous beach. So, while it required travel for nearly all the attendees, it was worth the trip.
The first of five sessions in the Display Industry Forum covered the display market outlook from a business and financial perspective. After our Director of Korea Operations Calvin Lee covered our view of the health of panel makers and the equipment market outlook, presentations from JungHoon Chang of Samsung Securities and Chris Chang of Nomura Securities gave the sell-side analyst perspective on companies in the industry.
The analyst view of display industry stocks is, to be polite, challenging. This chart from Nomura compares Display as one of several categories within the Technology segment, showing that the stock performance of the display segment lags far behind other tech sectors.
Stock Performance of Display Segment vs. other Technology Segments
Source: Nomura Securities, IMID Industry Forum
Such a comparison may be a little too pessimistic for the display industry since the most profitable company in displays, Samsung Electronics, is categorized under its larger Semiconductor division, rather than in displays. Nevertheless, the display sector’s stock performance has been disappointing, especially in 2018. Both the Samsung Securities Chang and the Nomura Securities Chang commented that the looming industry oversupply coming from the surge of capacity subsidized by the Chinese government was weighing heavily on display stocks.
As might be expected in a Korean conference, much of the focus of the analysts was on LG Display. Nomura’s Chang noted that foreign holdings of LG Display have reached an all-time low of under 25%, down from about 35% in January 2015, and that the short position on the stock exceeded 12%. Both analysts showed charts of LGD’s price-to-book ratio, noting that LGD’s P/B stands near the historical trough of 0.6, but Chang commented that whereas in previous cycles the trough was followed by a recovery, investors are much more cautious in this cycle because of the massive investments by Chinese panel makers.
According to the analysts, the best possible remedy for LGD is even more aggressive build-out of its OLED TV capacity. In response to a question about LGD’s approach, Nomura’s Chang noted that even though the capital requirements for OLED expansion are challenging, investors see LGD’s leading technology in OLED TV as the company’s best chance at success.
The second session of the Forum covered the TV market, and after I gave DSCC’s outlook (which has been well covered in the DSCM), LG Display’s BangSil Choi outlined the company’s approach to moving OLED beyond the category of TV and re-branding the technology as a Lifestyle product. LGD’s success in the business of OLED TV will rest on their ability to charge a premium price for OLED panels, even as LCD panel prices reach new lows in the coming years of oversupply.
In my opinion, the most informative talk of the conference was the first presentation after lunch, given by Chiwoo Kim, President and CTO of APS Holdings (the parent company of equipment supplier AP Systems). In a single slide (shown below), Kim laid out the challenges involved in Excimer Laser Annealing (ELA) of an amorphous silicon (a-Si) layer to create an LTPS backplane. AP Systems is the principle supplier of ELA systems to the industry, and the sole supplier to Samsung, so their perspective is well-informed.
Kim highlighted the challenge of ELA in achieving large grain size through “Near-Complete Melting.” The chart at the top right of the below slide image demonstrates the exceptionally narrow peak in grain size dependence on laser energy. One of the principle problems with OLED displays, Mura, can result from small vibrations during the annealing process. This helps to explain why making OLED displays at good yield has continued to be a challenge for panel makers.
Challenge of Achieving Optimum Condition for Excimer Laser Annealing
Source: APS Holdings, IMID Industry Forum
Kim stated that in his opinion QHD resolution is likely the resolution limit for the current method of wet etching of FMM, and that higher resolutions would require a new process for FMM called electro-forming, which has promise but is not yet feasible.
In wrapping up his long presentation, Kim described APS Holdings efforts at Thin Film Encapsulation (TFE) technologies for foldable displays. Kim expressed that he was unsure if the current thick TFE coatings would be acceptable for foldable displays and described two technologies in development to solve the problem: Atomic Layer Deposition (ALD) and a hybrid ALD-like Chemical Vapor Deposition (CVD). Kim also noted that the module process for foldable displays may require vacuum processes for lamination.
In the fourth session of the Industry Forum on smartphones, DSCC’s Yoshi Tamura covered our outlook (also covered extensively in the DSCM), followed by Ellike Chen of SigmaIntell, who highlighted some positive developments in the smartphone handset market.
Smartphone Handset Prices Increasing
Source: SigmaIntell, IMID Industry Forum
According to Chen, in the China market even though young people’s incomes are low, the smartphone is such a critical device for communication, information, and entertainment that they are willing to spend more on these devices. The average price of a smartphone has increased from CNY 3000 (US$439) to CNY 3200, and phone makers expect to try to push consumers up to CNY 5000 (US$732). Chen also highlighted the increasing power of the handset brands in negotiating with display panel makers, based on the consolidation of the market at the brand level and oversupply of phone displays.
On the technology side, the battle between glass and plastic was on display with glass represented in presentations by Corning and Schott, sandwiching a presentation by Solip Technologies on their Flex9H hard-coat for plastic foldable cover. The final presentation came from Dong-Seon Leeof the Gwangju Institute of Science and Technology (GIST), covering the promise and challenges of MicroLEDs.
Advantages of MicroLED Displays