OLED – Samsung’s Trinitron or the Slayer of the LCD Monster?

Back in March, in an editorial, I said:

“Thinking about this development (OLEDs) made me wonder why Samsung would try to do something so hard. Doh! The reason for pursuing OLED is precisely because it is so hard. The Taiwanese are a long way behind on OLED, Sharp has a deep commitment to LCD as a core technology, although it does still have R&D in OLEDs, and LG is behind, although its purchase of the Kodak IP shows that it understands the need to catch up. So, if Samsung can make this happen, it will have clear technology leadership.

It’s many years since NEC said of the LCD business that it was no longer about technology, but just about the appetite for investment and that was why it was getting out. (Some of those involved in the scale up from G3/4 to G10 might disagree that no technology was involved!) This moment may be when the display industry is about technology again”.

I repeated this point several times to a number of commentators, observers and analysts at last week’s SID and the idea clearly resonates (well, at least, nobody called me an idiot to my face!). Having also come directly from Shenzhen to the show, and having a sense of the huge momentum behind the Chinese push into LCD at G8, the logic of the earlier comment is even clearer.

Looking ahead (and this was repeated by Paul Semenza of DisplaySearch in the Business Conference at SID), there is no forecast for revenue growth in the LCD market for TV applications. On the other hand, there are half a dozen or so G8 fabs that will be built in China over the next few years to feed the demands of the Chinese TV set makers and consumers. Samsung has also said recently that it will again boost its G8 LCD capacity and has still not firmly committed to a definite date for a G10/G11 fab. That highlights that the ‘Generation Game’ – winning competitive advantage by exploiting the productivity gains of bigger substrates – is clearly over. If it wasn’t, Samsung, like Sharp, would already be making LCDs on a G10 production line.

So, from the production side, there will just be the relentless grind of cost reduction to try stay ahead of the Chinese at G8. The unappealing nature of this option could well be why, at the DisplaySearch conference in China, there was talk of Samsung showing reduced enthusiasm for a Chinese fab. On the other hand, that could also be some political posturing!

From the market side there is the prospect of good growth in LCD TV, but the reality is that most of the volume growth will come from the developing world of China, India, South America, the Middle East and Africa. The consumers in those regions want a lot more TVs, but they are going to want 15″ – 32″ sets for $49 to $99 to really boost volume. Again, that’s not an appealing thought for a panel maker.

So, Samsung has to do something that is really different. Ideally, the replacement technology would face some technical challenges in manufacture (a clear tick for OLED – especially as Dr. Kim showed that the structure of its OLED with frame driving has five transistors per pixel on one of his slides in his talk), would have clearly visible performance advantages in video applications (another tick for OLED – especially in 3D) and would have a lower cost of production (and if Samsung and DuPont and others are correct, another tick for OLED).

If Samsung could move to G8 production for OLED TVs (and that’s not a given although I wouldn’t ‘bet against Samsung’s engineers’) and has the solutions for the remaining technology questions for OLED TVs, then it will clearly have, to use our English phrase, ‘clear blue water’ between itself and its competitors. It should be able to then develop a significantly profitable TV and panel business based on a lower cost, better performing product, and probably even with a premium in the market. Samsung has shown very clearly that it knows how to do this with its introduction of LED TV.

In my March article, I said:

“I have said for a long time that while my heart (and eyes!) love OLED, my brain has to love LCD because of the money invested. Perhaps my head and heart can now get into alignment!”.

At SID this year I was able to say to Barry Young, once ‘the OLED guy’ at DisplaySearch, but now chairman of the OLED Association, that my head and heart were now pretty well aligned. I get it!

However, let’s not get carried away with the idea that OLED will sweep away the LCD industry. If Samsung goes ahead with a G8 line, by the time it arrives it would only represent a very small percentage of the overall display business.