manufacturing cost analysis by display technology · qhd smartphone display. > oled material price...

© 2016 IHS Markit. All Rights Reserved. © 2016 IHS Markit. All Rights Reserved.

Manufacturing Cost Analysis by Display Technology Jimmy Kim, Ph.D.

Principal Analyst / IHS Markit Technology

November 2nd, 2016

© 2016 IHS Markit. All Rights Reserved.

LCD, OLED and Flexible

Mobile Display

2


OLED trying to catch up LCD for high-resolution Cost gap getting narrower and higher pressure over LCD component supply chain

3

Cost table of 5.5” QHD smartphone display

Items

LTPS

LCD

Gen 6

OLED

Gen 5.5 Gen 6

Material

Array $0.4 $0.5 $0.4

Cell $0.7 $3.8 $3.2

Module $9.5 $6.1 $6.1

Non-Material $5.2 $9.4 $6.6

Total Manufacturing $15.8 $19.8 $16.4

Gap to LCD - X1.25

($4.0)

X1.03

($0.5)

Notes: Q3’16, non-material incl. labor, depreciation, etc. Touch module is not included.

Source: IHS © 2016 IHS

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

Gen 6 Gen 5.5 Gen 6

LTPS LCD OLED

Array Mat. Cell Mat. Module Mat. Non-Mat.


LCD vs. OLED 5.5" QHD smartphone display


How OLED cost can be lowered?

4

• Material cost of OLED is estimated to almost catch up that of LCDs for 5.5” QHD smartphone display.

> OLED material price has been lowered consistently.

> No backlight for OLED

• Non-material factors become more critical.

> Manufacturing yield

> Utilization rate

> Substrate size (Fab Gen., quarter/half cut)

> Depreciation

$0.0 $5.0 $10.0 $15.0 $20.0 $25.0

LCD

AMOLED

Total cost Material cost

Material and total cost for OLED vs. LCD (5.5" QHD)



OLED manufacturing yield improvement

• Ratio of output panel display area to input glass substrate area must be highly related with manufacturing yield.

• SDC’s ratio was found to increase a lot in Q1’15. Then, continued to grow again right after a sudden drop in Q2’15.

> Q2’15’s declining must be due to MP start of A3.

5

X0.35

X0.40

X0.45

X0.50

X0.55

X0.60

X0.65

X0.70

-

200.0

400.0

600.0

800.0

1,000.0

1,200.0

Q4 Q1 Q2 Q3 Q4 Q1 Q2

2014 2015 2016

ou

tpu

t/in

pu

t R

ati

o

Area (

00

0 s

q.m

ete

r)

Glass input

Display area output

Output/input ratio

SDC's output panel display area / input glass substrate area ratio trend


MP start of A3


OLED shipment growth in entry segment

• Samsung raised VGA-graded panel shipments a lot in 2015, mainly helped by aggressive promotion toward China.

• Recent saturation of VGA-graded panel shipments looks maybe due to more capacity allocation for Samsung’s Galaxy series.

6

0%

5%

10%

15%

20%

25%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2014 2015 2016HD and above VGA VGA%

Samsung's product mix of AMOLED smartphone panel shipments

Source: IHS ? 2016 IHS


Utilization improvement with entry-segment growth

• As a result of promotion for Chinese customers, utilization rate of SDC’s AMOLED Fabs has been improved a lot since 2H’15.

> Various customers and wide product mix would help SDC to maintain high utilization.

7

60.0%

65.0%

70.0%

75.0%

80.0%

85.0%

90.0%

95.0%

100.0%

Q1 Q2 Q3 Q4 Q1 Q2(F)

2015 2016

SDC A2

SDC A3

Gen 5 average

Gen 6 average

Utilization trend of SDC OLED Fabs

Notes:

© 2016 IHS


Effect of high utilization on OLED cost

• Cost may rise by ~10% when utilization is lowered to 80%

• Most of increase may be attributed to non-material part which includes most fixed items.

8

1.03x 1.09x 1.16x 1.00x

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

70% 80% 90% 96.8%(Q2'16 level)

Man

ufa

ctu

rin

g c

ost

Array Mat. Cell Mat. Module Mat. Non-Mat.Source: IHS

AMOLED 5"FHD panel cost by utilization rate

© 2016 IHS


Effect of substrate on OLED cost

• AMOLED cost varies a lot with substrate size and quarter/half cut for OLED process.

• Further cost saving is expected as MP in Gen 6 is stabilized.

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0.86x 0.82x 0.80x 1.09x 1.18x 1.00x

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

Half cut Full cut Quarter cut Full cut Half cut Full cut

Gen 4 (730x920) Gen 5.5 (1300x1500) Gen 6 (1500x1850)

Man

ufa

ctu

rin

g c

ost

Array Mat. Cell Mat. Module Mat. Non-Mat.Source: IHS

AMOLED 5"FHD panel cost by substrate size

© 2016 IHS


Effect of depreciation on OLED cost

• Let’s imagine two line cases

> AMOLED: MP start on Q1’13 / LCD: MP start on Q1’15

• AMOLED has potential to show much lower cost after full-depreciation.

10

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2015 2016 2017 2018 2019 2020

OL

ED

/LC

D c

ost

rati

o

Man

ufa

ctu

rin

g C

ost

AMOLED LCD OLED/LCD

AMOLED vs. LCD 5.5"QHD panel manufacturing cost change by quarter

Notes: AMOLED in Gen 5.5 since Q2'11, LCD in Gen 6 since Q1'14 © 2016 IHS

Full-depreciation of AMOLED line

Full-depreciation of LCD line


Flexible OLED shows much higher manufacturing cost Estimated to have 20% gap to current rigid panel, even can be wider to 50%.

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Cost table of 5.5” QHD OLED smartphone display

Items

Rigid Flexible

Gen 6 Gen 5.5 Gen 6

Material

Array $0.5 $0.4 $0.7

OLED $3.5 $3.0 $3.8

Encap. $0.3 $0.2 $0.03

Module $6.1 $6.1 $10.0

Non-Material $9.4 $6.6 $9.6

Total Manufacturing $19.8 $16.4 $24.1

Flexible to Rigid

at different Gen X1.21 X1.47 -

Notes: Q3’16, non-material incl. labor, depreciation, etc., Touch module is not included.


$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

Gen 5.5 Gen 6 Gen 6

Rigid Flexible

Array Mat. OLED Mat. Encap. Mat. Module Mat. Non-Mat.

Source: IHS

Rigid vs. Flexible 5.5" QHD OLED smartphone display

© 2016 IHS


Material cost increase in Flexible OLED

• Array material

> Differed by PI layer insertion. Carrier glass assumed to be non-recycled.

> Not a big portion gap observed, affected by price down of PI material.

• Encapsulation material

> Material cost of TFE can be lowered than glass frit + Encapsulation glass

• Module material

> Increase in PCB&others due to COF

> Lamination on curved surface may lower manufacturing yield a lot.

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Flexible

Rigid © 2016 IHS


Emerging technology and OLED

TV Display

13


Struggling premium LCD TVs

• UHD LCDs have helped to raise premium LCD shipments, but its driving force is declining.

• Meanwhile, portion of OLED TV shipments continues to increase in 2016.

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0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2013 2014 2015 2016

Sh

ipm

en

ts (

000)

OLED

LCD UHD

LCD FHD

OLED%

Shipments of premium TVs of price >$1,500

© 2016 IHS Source: IHS


QD for premium LCD market Samsung has lowered QD sheet cost a lot with its captive supply chain.

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Cost table of 55” UHD ELED LCD TV

Items Typical

(72%)

QD

Sheet

Captive

(nonCd)

QD Merchant

(Cd)

Sheet Tube

Material

Array $24 $24 $24 $24

Cell $62 $64 $64 $64

Module $107 $152 $220 $135

Non-Material $52 $56 $63 $55

Total Manufacturing $244 $296 $371 $277

Gap to LCD - X1.21

($52)

X1.52

($127)

X1.13

($33)

Notes: Q3’16, Fully-depreciated Gen8 Fab case, non-material incl. labor, depreciation, etc.


$0

$50

$100

$150

$200

$250

$300

$350

$400

Typical QD sheet(Captive)

QD sheet(Merchant)

QD tube(Merchant)


Source: IHS

Typical vs. QD 55" UHD ELED LCD TV

© 2016 IHS


Alternative WCG

CGEF(Color Gamut Enhanced Film)

• Enhance the color by blocking yellow.

> Avoiding mix of RGB is important

> Similar effect like C/F tuning

• Easy to adopt for MP

> Minimum modification of BLU structure

> MP at Q3’15, right after only a few months’ development

• Recently, LAP(Light Absorption Polarizer) of similar function is newly introduced.

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CGEF’s cost competitiveness As QD price drops, its competitiveness looks weaker than last year.

17

Cost table of 55” UHD LCD TV

Items

Typical

ELED

(72%)

CGEF

DLED

QD

DLED

QD

ELED

Captive

sheet Tube

Material

Array $24 $24 $24 $24

Cell $62 $64 $64 $62

Module $107 $109 $130 $147

Non-Material $52 $52 $54 $56


Gap to LCD - X1.02

($5)

X1.11

($27)

X1.13

($33)



$0

$50

$100

$150

$200

$250

$300

Typical ELED CGEF DLED QD DLED(Captive)

QD tube(Merchant)


Source: IHS

QD vs CGEF 55" UHD LCD TV

© 2016 IHS


Alternative WCG

On-chip KSF

• Mn4+ red phosphor (so-called KSF) > Sharp red peak enables >90%NTSC

without any C/F tuning.

• Weak point due to long remnant light > Difficulties in SG 3D, Blinking 240Hz... > As 60Hz UHD becomes popular, the

weak point looks not so critical now. > No issue for mobile: iPhone7 adopts

• Able to be coated on chip directly. > Material consumption can be saved

when compared with sheet/tube type.

18


KSF as new WCG light source KSF is a strong candidate for mid-segment WCG solution.

19

Cost table of 55” UHD LCD TV

Items

Typical

ELED

(72%)

QD

DLED

CGEF

DLED

KSF

DLED

Material

Array $24 $24 $24 $24

Cell $62 $64 $64 $64

Module $107 $130 $109 $92

Non-Material $52 $54 $52 $50


Gap to LCD - X1.11

($27)

X1.02

($5)

X0.94

($14)



$0

$50

$100

$150

$200

$250

$300

Typical ELED QD DLED CGEF DLED KSF DLED


Source: IHS

55" UHD LCD TV with various WCGs

© 2016 IHS


Can OLED survive as Special One? OLED is still expensive due to large investment and small production volume.

20

Cost table of 55” UHD TV

Items

Finest LCD

OLED Curved

HDR QD

Super

Slim

Material

Array $25 $25 $50

Cell $67 $66 $277

Module $198 $159 $84

Non-Material $63 $61 $296

Total Manufacturing $353 $311 $708

OLED to LCD of

different tech.

X2.00

($355)

X2.28

($397)

Notes: Q3’16, Fully-depreciated Gen8 Fab case for LCD, non-material incl. labor, depreciation,

etc.


$0

$100

$200

$300

$400

$500

$600

$700

$800

HDR QD Super Slim AMOLED


Source: IHS

Add your title here in sentence case

Source: IHS

AMOLED vs Finest LCD 55" UHD TV

© 2016 IHS


OLED cost by yield

• As yield of AMOLED improves, the cost gap will shrinks rapidly.

• However even under same yield condition, cost gap of 1.3X still remains due to large depreciation of OLED Fab.

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$0

$200

$400

$600

$800

$1,000

$1,200

30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

Man

ufa

ctu

rin

g C

ost

Production Yield

55" UHD AMOLED manufacturing cost change by yield


Current state

Same yield as

LCD

LCD manufacturing cost


OLED cost by yield after full-depreciation

• Under same yield and full depreciation, cost gap with premium LCDs can be almost negligible.

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$0

$200

$400

$600

$800

$1,000

$1,200

30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

Man

ufa

ctu

rin

g C

ost

Production Yield

55" UHD AMOLED manufacturing cost change by yield


Current state Same yield

as LCD

LCD manufacturing cost


Need for larger OLED Fab Cost for 65” OLED panel jumps a lot due to low glass efficiency at Gen8 Fab.

23

Cost table of 55” UHD ELED LCD TV

Items 55”

@Gen8

65”

@Gen8 @Gen10.5

Material

Array $50 $100 $68

Cell $277 $555 $354

Module $84 $98 $98

Non-Material $296 $575 $344

Total Manufacturing $708 $1,328 $864

. X1.88

($620)

X1.22

($156)

Notes: Q3’16, non-material incl. labor, depreciation, etc.


$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

55"@Gen 8 65"@Gen 8 65"@Gen 10.5



Gen 8 vs Gen 10.5 for 65" OLED TV


Wrap-Up

• Mobile display

> Cost of AMOLED has lowered a lot recently mainly helped by yield improvement and utilization increase with promotion to Chinese customers.

> Further improvement is expected with MP ramp-up in Gen 6 Fab and lowering depreciation cost.

• TV display

> Many of emerging technologies are competing against AMOLEDs

– Design: Curved, Super-slim / Picture quality: QD, WCG(KSF, CGEF), HDR

> UHD OLED technology improved a lot. However, top emission and substrate size will be the next hurdle for further improvement.

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Thank You

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manufacturing cost analysis by display technology · qhd smartphone display. > oled material price...

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