The tl;dr version: Apple’s dangling its OLED plans in front of its suppliers like grapes in front of Tantalus. That’s hurting timelines for investment in next generation OLED manufacturing.
A lot of the news coming out of the Asian press is like little trial balloons of expression by local manufacturers frustrated by the economic uncertainties of the time, and the lack of any clear guidance from western customers. The South Korean OLED industry’s potential for growth has a significant stake in adoption of OLEDs in computing, but it faces a dilemma due to the lack of clear indications from market leaders like Apple. The biggest variable for LG Display and Samsung Display is Apple’s demand and pricing for OLED panels for MacBooks and tablets. The gripes are coming out of The Elec, which seems to be happy to be the a mouthpiece, in some ways, for local companies.
Apple’s OLED iPad Pro should be out next year and may presage OLED adoption on future MacBooks but there is a lot of uncertainty about what Apple has planned, and that’s threatening investment plans across the board for manufacturers. The South Korean’s know that Apple could turn a brick into an iPhone and make a market, they’re not so sure about computing products. Rightly so. It may be that Apple isn’t really sure what to do with pricing. I mean, it could keep going up, but at some point, it might just go too far, even for the die-hard fanboys.
That all ties into investment in 8th generation OLED, which is absolutely necessary to prepare for everything from a laptop to a tablet to a desktop monitor.. Current Gen 6 and 5.5 production lines are not going to cut it. Samsung Display and LG Display equipment suppliers are expecting to get orders for Gen 8 production equipment in this second quarter. That’s helped to drive prices higher from companies like Canon Tokki, adding another layer of difficulty to the transition process. If either Samsung or LG were looking to deliver Apple MacBook OLEDs by the first half of 2025, they’re running of time to make all the right moves.
In to all this, you can add today’s other story about LG Display’s ambitious plans to expand its OLED production capacity delayed due to external economic factors beyond the company’s control. Everything suggests that we are witnessing a pivotal Q2 2023. We won’t know the real picture until results coming in from equipment manufacturers, who will be able to break it down much better than the display manufacturers in terms of what the future might bring. It will also may mean we’re going to be looking at a holding pattern for OLED’s expansion into the traditional computing world.
In the meantime, Chinese manufacturers are going to have a chance to catch up to Samsung and LG, in some ways, and compete on future OLED display supply. Chinese companies like BOE, and CSOT have been investing in OLED production capabilities and have made significant progress. They have been competing with South Korean manufacturers like Samsung and LG, particularly in the smartphone OLED market. While the Chinese face the same issues in terms having to pay more for Japanese equipment, and sanctions, they have a habit of creating other efficiencies.
For those companies looking to enter the display industry, whether through direct manufacturing, or as a supplier of materials and manufacturing technology, this uncertainty and the indecision it is creating will end up being an opportunity to establish a wedge into the market. As long as you can offer a breeze of fresh air to stir the market, even a little bit, that would be better than entering when there is a whirlwind of activity during a typical growth cycle.
