According to the market track for the second quarter of 2020 published by UBI Research, the total OLED shipments in the second quarter were 107 million units, down 13.4% (QoQ) from 124 million units in the last quarter. In addition, it decreased by 16.6% (YoY) compared to the 122 million units in the second quarter of 2019. This is because sales of OLED set devices decreased due to the aftermath of COVID-19.

However, it was found that the OLED market for smartphones that support the OLED market was significantly affected by COVID-19 compared to the overall market.

OLED shipments for smartphones in the second quarter were 87 million units, down 17% from the previous quarter (QoQ), and 23.1% from the same quarter last year (YoY). Compared to the decline in overall OLED shipments, the decline in OLED shipments for smartphones is even greater. However, the reason for the decline in OLED shipments for smartphones is concentrated on rigid OLEDs.

Despite the sharp decline in OLED shipments for smartphones, flexible OLEDs grew 38% compared to the same quarter last year.

However, the YoY of rigid OLED shipments was -40.3%, a sharp decline from the same quarter last year.

The reason why the increase in flexible OLED for smartphones has soared and the shipments of rigid OLEDs have fallen sharply is because Chinese smartphone makers reduced production of mid-priced smartphones using rigid OLEDs and increased smartphone shipments using flexible OLEDs.

According to UBI Research’s CEO Choong Hoon YI, the reason Chinese smartphone makers have increased their flexible OLED smartphone shipments is: First, due to the influence of Apple, Chinese smartphone makers also use OLED for their flagship models. In particular, Chinese smartphone makers use the name plus or max, which are used by Apple and Samsung Electronics, for the highest-end specifications, and imitate that they are making a product that is equivalent to Apple and Samsung Electronics, which are the most recognized in the smartphone market. The second reason is that Chinese display makers have improved OLED manufacturing technology, allowing them to produce panels similar to Samsung Display’s OLED. In particular, it is because Chinese panel makers are supplying panels at 60% of Samsung Display’s price, so Chinese smartphone makers have increased the choice of flexible OLEDs. The third reason is that Chinese panel makers can supply OLEDs at low prices because of the Chinese government’s subsidy policy.

YI said that the OLED industry will become more active due to the increase in OLED usage by Chinese smartphone makers, but the growth of Samsung Display’s OLED business, which has maintained a monopoly position in the smartphone OLED market, may stop growing due to the increase in production of Chinese panel makers.

According to UBI Research’s report on changes in the OLED market caused by coronavirus, the forecast for the 2020 OLED modification market is $ 36.7 billion in sales and 612 million units. This is a decrease of 4.8% and 7.6%, respectively, from the expected sales of $ 38.5 billion and shipments of 6.6 million units at the beginning of the year.

As a result of UBI Research’s analysis of the effect of coronavirus on the OLED market for two months, the global smartphone market is expected to drop by 20% and the TV market is expected to decrease by 15%. However, the impact on the overall OLED industry was judged to be only 5-8%. OLED panels for smartphones, TVs and watches are expected to decrease, but the market for OLEDs for monitors is expected to increase.

The expected OLED shipment for smartphones was 527 million units at the beginning of the year, but the forecast for correction is 486 million units, a decrease of only 7.8%. Although the market for Galaxy and iPhone is analyzed to be higher than the average decrease rate, Chinese smartphone makers are expected to reduce LCD smartphones and increase production of OLED smartphones significantly.

Chinese smartphone makers’ use of OLED seems to follow Apple’s business direction. Flagship models of Chinese smartphone makers have used Pro and Pro Plus. Pro is the model grade name used by Apple and Plus is the model grade name used by Samsung. However, flagship models of Chinese smartphone makers that are launching this year are using both Pro and Pro Max as well as Apple. All of these models, like Apple, plan to use flexible OLEDs.

The OLED TV market was found to be greatly affected by coronavirus. Estimated shipments at the beginning of the year were 4.9 million units, but the forecast for correction was 3.6 million units, down by 1.3 million units. A 26.5% reduction is expected. This is 300,000 units more than 2019 shipments. This is because the production schedule of the Guangzhou factory has been postponed since the third quarter due to the coronavirus, and TV sales are plunging due to the spread of coronavirus in Japan and Europe, the main markets for OLED TV. In fact, Japan’s TV performance in the second quarter was below 50% in 2019.

However, the demand for the OLED panel business for monitors that Samsung Display has been promoting since the second half of last year is expected to increase due to the game industry, telecommuting, telemedicine, and remote classes due to the aftermath of the coronavirus.

Samsung Display and LG Display, whose business trip to Vietnam was blocked by the Corona virus, are trying to prevent delays in OLED production by launching charter.

Samsung Display, which produces OLED for mobile devices, operates a line of OLED modules for smartphones in Bac Ninh, Vietnam, and Samsung Electronics also has smartphone manufacturing plants in Bac Ninh and Tai Nguyen. Samsung Display installed the foldable OLED module line 30K in December 2019. In this module factory, Samsung Display is producing foldable OLED modules for Galaxy Z flips, which Samsung Electronics has begun selling this year. LG Display invested a total of KRW 1 trillion in Haiphong, Vietnam in May 2016 to produce the OLED module, built a module factory and started operation in September of that year.

The Vietnamese government is blocking entry from Korea to prevent the spread of coronavirus. This has made it difficult for Korean companies with factories in Vietnam to travel to Vietnam. However, Samsung Display and LG Display are preparing a charter for the normal operation of their OLED module factory and are on a business trip to Vietnam.

If Samsung Display is unable to manage the Vietnamese module factory, Samsung Electronics will disrupt the production of the Galaxy Z Flip, which is the biggest game this year, and may cause huge losses and may be affected by the leading position in the foldable smartphone market. LG Display is also in an urgent situation. From the fourth quarter of last year, LG Display began to supply pOLED to Apple following Samsung Display, and pOLED shipments to Apple are increasing this year. As LG Display supplied pOLED to Apple, sales increased significantly last year. This year, LG Display’s Apple supply is expected to reach 15 million units.

Therefore, these two companies are desperate to manage the module factory in Vietnam to maintain the OLED business.

Dark clouds are approaching Korean industry by the corona virus that has been blown since the beginning of the year. Wuhan, the birthplace of the corona virus, is badly affecting the Chinese display industry because it is a key place where Chinese display makers are building large production bases.

Wuhan and other plant set-ups are experiencing difficulties due to the lack of manpower needed to build the line. At the same time, the utilization rate of the entire supply chain in China is falling sharply, as the labor force of parts and materials manufacturers in China is delayed to return to the factory. In the smartphone industry, the center of the OLED industry, iPhone production is affected in the first quarter. Foxconn’s factories, which produce iPhones in Zhangzhou and Shenzhen, China, are operating at 50% at end-February. This is because manufacturing workers are returning to the factory late. Companies such as Huawei, Xiaomi, Oppo, and Vivo are also hampering smartphone production due to delays in parts procurement.

Nevertheless, the production of OLED smartphones is not much affected yet. First, Samsung Display’s panel production plant, which accounts for 86.3% (2019) of OLED shipments for smartphones, is located in Korea, while the module plant in Vietnam is not affected by China. In addition, the supply chain has no effect as most of the material production bases that make up OLED panels (including modules) are also in Korea.

Samsung Display’s OLED production for smartphones in January and February totaled 48 million units, less than 2 million units compared to 50 million units shipped in the same period in 2019. Of these, 14 million and 17 million units were supplied to Chinese smartphone makers in 2019 and 2020, respectively. This year, more than 3 million units are shipped. So far, Samsung Display’s OLED business is not affected by the corona virus.

The total market share of Chinese OLED panel makers in 2019 is 11.7%. By February, the panel utilization rate of Chinese OLED panel makers was maintained at 80%. The impact of factory operation due to lack of manpower is about 20% because most of the display manufacturing industry is driven by automated facilities. Chinese OLED makers import most of the major materials, including light emitting materials, from Korea and Japan, so they are hardly affected by the corona virus.

The parts procurement status of smartphone makers in China affects the market. If Chinese suppliers, including Huawei, fail to procure parts in China, smartphone production will be hampered. However, as Samsung Display’s OLED production for China is progressing smoothly, Chinese smartphone makers have a strategy of maintaining OLED smartphones, which are expensive brands.

In addition, the first quarter is the off-season with the lowest shipment season, so even if it is difficult to operate a smartphone manufacturing plant until March, the impact on the overall market is about 10%. After the second quarter, if the corona virus subsides, demand can resume.

The problem is from March. China’s corona virus has slowed down, but South Korea has been expanding since the last week of February. There is someone has a virus at Samsung’s Gumi smartphone manufacturing plant. In addition, the Vietnamese authorities, concerned about the influx of South Korea’s virus, refused to visit Koreans, which may make it difficult for the headquarters to properly deal with problems with Samsung Display’s module plant management in Vietnam.

Most important of all, the corona virus is spreading all over the world, and economic activity is severely reduced. In China, the entrance of the apartment is blocked, so it is difficult to bring TV. The Chinese TV market is shrinking. Many people are refusing to go out because they are concerned about a corona virus infection, so fewer people visit a store and buy a smartphone. Consumer sentiment is falling significantly.

Assuming that the corona virus crisis will end in March in Korea and China, the impact of the smartphone OLED industry on 2020 is estimated to be about 5%, but if it is prolonged, it may be adversely affected by more than 10%. Assuming that the corona virus crisis will end in March, the impact of the smartphone OLED industry on 2020 is estimated to be around 5%, but if it continues until the first half of the year, it could be adversely affected by 10%.

The OLED business for TV is slightly different. LG Display’s factories that produce exclusive OLED panels for TVs are located in Paju, Korea, and Guangzhou, China. The Paju plant is not disrupted at all. Like OLEDs for smartphones, parts and components are mostly supplied by Korean and Japanese companies, so Paju factory is not affected by China.

The problem is the Guangzhou plant. LG Display has been expected to produce panels since September 2019, but its supply has been delayed due to poor panel lifetime. LG Display has begun production of panels again this year and is undergoing product tests from customers. Recently, however, the corona virus has begun to spread in Korea, making it difficult for Korean engineers to go to Guangzhou. Even if the corona virus disappears in the first quarter in China and the factories operate normally, it may take some time before the panel is supplied from the Guangzhou plant.

According to Ubi Research’s OLED market track, the 2020 forecast is 4.95 million units without considering the corona virus situation, of which 750,000 OLED panels for TV can be produced by LG Display in the first quarter. If the 55-inch production volume is large, up to 800,000 units can be produced. Since the data were prepared in anticipation that panels produced at the GuangZhou plant will be available from the second quarter, LG Display’s panel supply is expected to be 1.4 million units in the second quarter.

However, it is possible that production will be delayed after May if the customer’s quality certification of panels produced at Guangzhou plant is delayed due to the Korean coronavirus rather than the Chinese coronavirus. In that case, the annual TV panel production could be reduced by about 200,000 units, which is expected to decrease by 4% from the estimated total. However, if the corona virus is prolonged by June, it can cause up to 10% of adverse effects. The market should consider 500,000 fewer than expected.

Reporter : Daejeong Yoon

According to UBI Research’s 4th quarter OLED display market track, rigid OLED is still the main product in the OLED market for smartphones, with 79.2% of the total OLED market in 2019. As a result of counting and analyzing shipments up to the third quarter of 2019, rigid OLED accounted for 237 million units of the total shipment of 338 million units.

<Source: UBI Research Q4 OLED Market Track>

Display companies all over the world have invested heavily in the flexible OLED line, but rigid OLED is still the main OLED used in smartphones. This reflects that the display companies have invested without forecasting the market situation properly.

Rigid OLEDs for smartphones are mostly supplied by Samsung Display. Rigid OLEDs are also produced in China’s Visionox and EDO, but are not yet available to brand companies. As the A1 and A2 lines, which produce rigid OLEDs at Samsung Display, are both in full operation, Samsung Display can no longer supply products in the growing rigid OLED market.

Flexible OLED lines will continue to be invested by 2023, and the annual production area will increase to 20 million square meters per year, but the line capa for rigid OLEDs has been frozen since 7 million square meters per year.

<Source: UBI Research Q4 OLED Market Track>

Therefore, in order to cope with the growing rigid OLED market, it is necessary to convert flexible lines to rigid OLED lines or to further invest in rigid OLED lines.

In order for Samsung Display to dominate and have a differentiated market in the display industry, it is time for latecomers to consider converting flexible OLED lines to rigid OLED lines.

According to the OLED market track published by UBI Research in the third quarter, OLED sales increased to $ 6.9 billion in the second quarter. This is an increase of 9.5% compared to last quarter, an increase of 18.5% from the same quarter last year.

The biggest reason for the increase in sales is the increase in OLED sales to China by Samsung Display, which leads the OLED industry. Huawei, Oppo, Vivo, and Xiomi’s OLED usage increased more than 1.5 times compared to last year, and Samsung Display’s sales in the second quarter were $ 5.5 billion. In addition, LG Display’s WRGB OLED sales growth and BOE’s flexible OLED sales boosted the market to $ 6.9 billion.

Samsung Display’s sales share accounted for 79.9% and BOE’s market share increased to 6%.

<Source: 3Q2019 UBI Research OLED Market Track>

In 3Q, sales are expected to increase further. Samsung Display’s flexible OLED shipments will increase further for Apple’s new models and Huawei’s Mate. LG Display will also begin supplying flexible OLEDs to Apple, and BOE has decided to supply flexible OLEDs to LG Electronics.

Attentions are growing for the foldable smartphone since it can provide a wider screen and higher resolution than the display of conventional smartphones, while maintaining the portability of the smartphone. The foldable smartphone is a smartphone when folded, and it becomes a tablet PC when it is unfolded. Following Samsung Electronics, Huawei is also aiming to launch a smartphone with a foldable display this year.

Yi Choong-Hoon, president of UBI Research, said, “Ideal foldable displays require such kind of reliability that there is no problem even with more than 300,000 times folding at the bending radius of 1R or less. For this, some changes or innovations are needed in the material and structure of the display.

In the ‘2018 OLED Component & Material Report’ published by UBI Research on May 21, 2018, the key issues and development trends for foldable OLED display with a bending radius of 1R are described together with the classified contents of structural change to secure reliability at thickness reduction and alternative material development.

<Change in OLED panel thickness accoding to bending radius, 2018 OLED component & material report, UBI Research>

In addition, the report covers the application status, development trends, and market forecast of key components and materials for rigid OLED and flexible OLED for mobile device, and large-area OLED for TV. Thus, it is helpful for the related part and material companies to develop their future directions, establish business strategies, and analyze technology and market trends.