The flat panel display (PFD) equipment market enjoyed the dizzying heights of $20.2bn in revenues in 2017, but a warning was issued this week by researchers at IHS Markit – forecasting flat panel display revenues to fall by over $6bn in just two years, a nosedive which could cause serious problems for a host of manufacturers.
IHS Markit essentially points the finger at the Chinese government for setting up the conditions for a burst bubble in 2020. Having pumped local panel makers full of finances, land grants, reduced taxes and direct subsidies – in order to build up a homegrown industry, especially in the newer active-matrix OLED (AMOLED) display technologies – the Chinese authorities have driven players to invest prematurely in new factories, the report argues.
This is at a time when major producer South Korea has recently pulled back on some of its Gen 6 flexible AMOLED capacity plans, because of slower than expected panel demand growth, according to IHS.
Of course, when the iPhone X launched in November 2017, its $999 price tag was scrutinized, but this was due to the display module coming in as the most expensive element – costing $110 including the AMOLED panel, cover glass and Force Touch sensor.
The FPD equipment market is made up mainly of components for LED and LCD screens, the latter being dominant in TV for the last decade, but the FPD market has a new darling in the form of AMOLED technologies, which are aggressively targeting smartphones in particular. “The glut level of thin-film transistor AMOLED panels for mobile applications is forecast to exceed 40% of the demand in terms of area in 2019. This implies that, on average, factories for mobile applications are likely to be underutilized,” cautions IHS Markit.
As for more expensive OLED screens, the analysts warn of tight panel supply over the coming years, but with a growing niche forecast to rise from 2.9m units in 2018 to 6.7m units in 2020, despite low demand in comparison to LCD TVs. LG Display dominates the OLED TV market.
It would be interesting to compare this with the size of the curved panel display market, both OLED and LCD. On top of immersive viewing in the sense that “everyone has the best seat in the house” being the main selling point for curved TVs, they are also reported to reduce power consumption, reduce reflections, and enhance image quality by converging light in the center, although the high manufacturing costs are likely to hinder the growth of the curved panel market.
IHS Markit research shows FPD equipment revenues experiencing a similar lull between 2010 and 2012, declining from about $14bn to $3bn, before a $17bn resurgence over the next five years. When taking into account the market size just six years ago, the fact the market has managed to maintain similar revenues for a decade, projected at $14bn in 2020, eases the seriousness of the situation. Indeed, the main worry is whether a repeat of the 2012 crash comes as soon as 2022, but IHS Markit data does not yet stretch this far.
The IHS Markit AMOLED and LCD Supply Demand & Equipment Tracker says equipment spending in 2019 will be significantly supported by the conversion of legacy LCD fabrications (the production process) to advanced AMOLED factories. anufacturers including Samsung Display and JOLED are implementing thin-film transistor processes such as adding OLED frontplane, color conversion, cell and module equipment, hoping to stay ahead of the competition in the advancing AMOLED TV market.
Conversely, a report from Research and Markets published in January 2017 projected an FPD equipment market CAGR of 0.92% during the 2017 to 2021 period, covering mostly displays for notebooks, smartphones, tablets and TVs, at the time also highlighting AMOLED as the future.
“How all the equipment being installed will affect the future opportunity is a question that equipment makers are now struggling to answer. Based on IHS Markit analysis, the correction will continue beyond 2020,” noted Chase Li, IHS Markit senior analyst.
Samsung interestingly has moved to a totally different Quantum Dot LED system, using technology from acquisition QD Vision, and it will be on a completely different costing process, so it may fare better or worse than most of its rivals.