DSCC released its latest Quarterly OLED Supply/Demand and Capital Spending Report in the first half of July. Some of the highlights include:
- The company has identified 76 different phases of OLED capacity investments, including 7 lower probability fabs, from 2016 to 2021.
- Realistic OLED input capacity for mobile applications is expected to rise at a 41% CAGR from 5.3M m2 in 2016 to 29.4M m² in 2021.
- Apple is expected to account for 38% of mobile input capacity in 2018, up from 0% in 2016, before declining to 25% of capacity by 2021 as others grow. In addition to investing in SDC’s A3 fab, we expect Apple to also invest in LG Display’s E6 fab and its E7 fab to ensure a second source of supply. With Apple and Samsung’s share of OLED capacity well above their smartphone market share, we expect Apple and Samsung to leverage their OLED position to take market share.
- Most of the mobile capacity investments will be for flexible displays. As a result, flexible mobile OLED capacity will overtake rigid capacity in Q1’18 on an input basis and Q1’19 on an output basis.
- China’s OLED capacity for mobile applications is expected to rise at a 114% CAGR with its share rising from 4% in 2016 to 34% in 2021.
- OLED panel shipments for all applications are expected to rise at a 28% CAGR from 393M in 2016 to 1.33B in 2021.
- Smartphone displays accounted for 94% of OLED unit shipments in 2016, and are still expected to account for 90% of unit shipments in 2021.
- VR and Smart Watches are expected to be the #2 and #3 applications on a unit basis depending on the year.
- OLED TVs are expected to rise at a 49% CAGR and reach 6.5M units in 2021.
- OLED smartphone shipments are expected to rise at a 26% CAGR and should overtake LCDs in the smartphone market in 2019.
- LCD smartphones are projected to fall at a 9% CAGR from 1.22B units in 2016 to 771M in 2021.
- With OLED capacity tight in 2016 and Apple and Samsung expected to consume much of the OLED supply growth in 2017 and 2018 as they transition to all OLED smartphones, the OLED supply/demand situation is not expected to loosen until 2019. In 2019, the surplus is expected to be 10% in our conservative supply scenario based on realistic capacity.
- Big factors in the OLED supply/demand outlook include:
- Will Samsung try to crowd our competitors investments by approving at its July Board Meeting the world’s largest OLED fab at 180K substrates/month, build twin 135K fabs or build just one 135K fab and how fast will these fabs ramp? If Samsung does try to maintain its market position by outspending the competition, average yields will be higher and it may slow down Chinese OLED suppliers’ plans.
- How much capacity will be dedicated to lower yielding and larger foldable and rollable products? We show the highest yielding OLED suppliers moving to foldable and rollable which will significantly reduce the amount of output capacity.
- How quickly will Chinese OLED suppliers improve their yields? We have a tiered supplier approach to yields with a significant difference today between the yields. If that gap narrows, it will accelerate a surplus and could potentially slow down spending… On the other hand, it could lead to the acceleration of larger sizes and new form factors, which are inherently, lower yielding.
OLED Revenue Forecast
- OLED revenues are forecast to rise 46% this year to a record $21.2B and reach $46B by 2021. Smartphones are expected to continue to dominate with an 86% revenue share in 2017 falling to 81% in 2021. .
- TVs are expected to be the #2 application for revenue throughout the forecast, with their annual share ranging from 6% – 9%.
- Other applications are only expected to account for a 6% – 10% share due to strong demand from smartphones and TVs. However, as supply loosens, we expect panel suppliers and brands to try and develop other applications as a case can be made for increased OLED penetration into most markets.
OLED Equipment Forecasts
- For the eight segments covered in the latest issue, 139% growth is expected in 2017. In 2018, the market is expected to be flat although there is still time for additional investments to get pulled in.
- Canon revenues from OLED fabs should approach $2B, the highest among all equipment companies.