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Generation after Generation- Surge in LCD manufacturing activity-what about OLED activity?

Post Time:Jul 07,2009Classify:Industry NewsView:279

Implications
(1) Cautiously Planned LCD supply by manufacturers have resulted in short supply and consequent price increase. There is an opportunity for making up the loss incurred by panel manufactureres in 2008. (2) Increase in demand for LCD TV, including the recent demand from China, is forcing the manufacturers to enhance the capacity utilization that was deliberately reduced in 2008.  (3) In an anxiety to exploit the increased demand situation, intense manufacturing activity is forecast to result in over supply by Q4-2009/Q1-2010.    (4) The increased panel manufacturing activity including improvement in LCD technology may serve as one of the factors, among others, to slow down the manufacturing of large size OLED and hence slow down the penetration of OLED TV.

Analysis
LCD panel manufacturers have financially lost in 2008. They cut the capacity utilization in 2008 and made a tight supply situation by the start of 2009. Consequently the panel prices started increasing, a trend the manufacturers wanted to happen. This phenomenon is typical of market forces coming in to play. The manufacturers will take advantage of the situation to gain profit during Q3 and Q4 of 2009. The competition among the panel makers to grab the increased demand is forcing them to enhance the utilization of manufacturing capacity. We hear news about every leading manufacturer increasing the activity. (i)Samsung-Sony joint effort to use 11th gen glass for manufacturing (ii) Sharp-Sony joint effort in planning to produce in 10G plant in March 2010 (iii) LG planning to expand its 8 Gen facility (iv)AUO planning to build a line that will use 8.5 Gen technology in 2011 (v) Sharp in talk with Chinese Govt on 8 Gen line. While some companies are planning for 10G plant and 11G plant, some others feel 8G line or plant is enough for now. On top of these activities there are activities that are going on to streamline the new technologies like 240HZ technology and Direct-lit LED BL technology. These technologies in mass manufacturing should yield the same yield as the conventional technology. For those who worked on-line it is obvious that the effort needed is not trivial but substantial. Samsung is leading in LED-lit LCD TV and 240HZ LCD TV. Increase in demand for LED-lit LCD TV technology will benefit LED manufacturers like Lumiled/Philips, Osram, Toyoda Gosei, Cree, Epistar, Everlight, Seoul Semiconductors, Nichia and many others. .. Going back to the chain, suppliers of MOCVD equipment for the manufacture of LED chips, like Aixtron and VEECO will gain increased orders for MOCVD equipment. This in turn will go back to the saphhire substrate and SiC substrate suppliers to the LED industry. Many small LED packaging houses stand to benefit in this.

Meanwhile there are announcements on OLED panel for TV. Samsung announced that their 31" OLED TV is ready for production. LG announced their 15" OLED TV will be sold in Korea in Dec 2009. Sony repeatedly announced on the release of 21", 27" OLED TV. All these OLED TVs will require OLED panels. LCD manufacturers are also OLED manufacturers. These companies may adopt certain financial and technical strategies. Building 7 gen or 8 gen plants for OLED manufacturing is capital intensive like LCD Gens. In the past the backplane for OLED was trivialized as a simple modification of the LCD backplane. Later it was found that was not the case.

The LCD panel makers would like to concentrate on ROI for the large capital investment they made. (It costs ~$3.9B to build a new 8G plant). The question is whether the intense activity in LCD manufacturing, among other techno-economical factors, slow down OLED manufacturing and hence OLED TV since we do not see the rapid penetration of large size OLED TV.

Source: http://www.glgroup.comAuthor: shangyi

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