Shenzhen Enrich Electronics Co.,Ltd

“As stated in our mid- and long-term strategy released in August 2015, the main purpose of building the 10.5 production line in Paju is to produce OLED panels, which is also an important reason for our decision to invest in advance.” LG Display told China Electronics "Reporter": "At present, the progress of this project is consistent with our investment strategy. However, due to the verification of relevant technologies, the completion of this process will take some time. We are actively carrying out various programs. Verification and discussion will also take into account many factors such as market, demand, profitability, customers, and the company itself."

LG Display emphasized that the specific investment direction of the P10 plant is currently under discussion and has not been specifically decided. However, Li Yaqin, deputy general manager of Quzhi Consulting, believes that, now that there is excess liquid crystal capacity and prices are falling, LGD should reassess its original investment strategy. LGD may accelerate the pace of investment in 10.5 OLED lines.

Sales growth, camp expansion

LGD Plus OLED

After 5 to 6 years of market cultivation, OLED TVs have become the mainstream of high-end markets. According to IHS data, in 2017, in the high-end TV market of more than US$2,500, OLED TVs accounted for 51.3% of the world's total, occupying half of the country’s total, surpassing LCD TVs for the first time.

And the advantages of OLED TVs in the high-end market will be further expanded. IHS expects that in the high-end market, OLED TVs will continue to maintain high-speed growth. In 2018, the proportion of OLED TVs in the high-end TV market of US$2,500 will climb to 70.7%.

In fact, in the downturn of the TV market, the OLED TV market in the first quarter of 2018 has experienced rapid growth. According to the IHS Markit data, global OLED TV shipments in the first quarter of 2018 increased by 115.8% year-on-year to 470,000 units. Quzhi Consultation also pointed out that global OLED TV shipments in the first quarter of 2018 were 510,000 units, a substantial year-on-year increase of 127%.

Under the homogeneity and low price competition, OLED TVs as differentiated high-end products not only can enrich product lines, but also help improve operating profits, attract more and more manufacturers to join, and the OLED television camp continues to expand. Quzhi Consultation indicated that LG Electronics and Sony have significantly improved their profitability through the layout of ultra-high-end OLED TVs. Operating profit margins in the first quarter of 2018 were 14% and 7.4% respectively, an increase of 5.5 and 9.0% from the same period last year. 8 percentage points. Not only that, the European brands LOEWE and Arcelik also joined the camp and are actively selling in the European market. In the second half of the year, Hisense will mass-produce OLED TVs and give priority to the Chinese and Japanese markets.

However, LG Display is the only manufacturer that currently mass-produces OLED TV panels. The increase in OLED panel production capacity cannot meet the urgent needs of downstream terminal brand manufacturers. QuZen Consulting stated that LG Display's production capacity in G8.5 is only 60K per month, and it is planned to increase to 70K per month in the second half of the year. The brand customer demand tends to be positive. Therefore, the OLED panel will gradually appear that the supply cannot meet the demand. Quzhi Consulting predicts that sales volumes of LG Display's Pao G10.5 and Guangzhou G8.5 OLED production lines will be significantly increased. The penetration rate of OLED TVs in the global TV market is expected to exceed 2% since 2020.

While LGD is increasing its production capacity as much as possible, it is also promoting OLEDs to the market. “At present, with various leading technology advantages, the promotion and popularization of OLED is also in full swing,” said LGD. “We believe that OLED will become more and more active in the high-end TV market in China with great potential. In the OLED field, We will continue to use LG Display's leading technological advantage to promote the development of the high-end TV market, and plan to expand the sales of OLED business to 40% by 2020."

It is too difficult to take up too much of the technology

10.5 Lines Face Four Major Challenges

However, the high price of OLED panels has limited the speed of the OLED TV market. Although OLED TVs have stood a foothold in the high-end TV market, OLED TVs account for only a small percentage of the global TV market. In 2017, OLED TVs sold 1.7 million units worldwide, accounting for less than 1% of total sales. This year's LGD shipment target is 2.8 million OLED panels. The OLED TV market has grown rapidly, but absolute sales are still insufficient to allow OLED TVs to enter the mass market.

Quzhi Consulting pointed out that the price of the same-size OLED TV panel is 3 to 4 times the price of LCD TV panel; the price of 55-inch OLED TV is about 10,000 yuan, and the price of 65-inch OLED TV is about 20,000 to 30,000 yuan. The price of OLED TVs is also 3 to 4 times that of LCD TVs of the same specifications. The high price positioning limits the consumer groups of OLED TVs. Its sales volume in the world accounts for only about 1%, and the purchasing groups are mainly high-income consumer groups.

At present, only LG Display can mass produce large-size OLED panels. Downstream brand manufacturers are still concerned about supply risks and control the market pace of OLED products. Quzhi Consultation expects that the price of OLED TV panels will stabilize in the short term, and the price of the whole machine cannot be significantly adjusted. It will take a long time for the sales and penetration rate to increase significantly.

If the OLED TV panel market can expand as quickly as the mobile OLED panel market, more manufacturers may join. It is understood that Samsung, BOE, China Star Optoelectronics are developing large-size OLED panel technology, in which a small part of Huaxing Optoelectronics line 11 production capacity is still left to the large-size OLED panel, but the current view of these manufacturers are still waiting to see.

It is understood that, at present, LGD is working with upstream and downstream industry chain companies to conduct a variety of technical verification 10.5 line. LGD 10.5 line has two routes to choose from, one is evaporation, one is printing.

At present, the evaporation scheme is more mature. LGD has mass production experience in the 8.5 generation line. If it can solve the problems of the 10.5 generation line, the 10.5 line mass production may be relatively large, but the LGD will face at least four Great challenge. Xu Zheng, a professor at Beijing Jiaotong University, believes that if LGD's 10.5th generation OLED production line uses an evaporation process, it will at least encounter three major problems. First, the oxide TFT backplane can achieve large area fabrication, but if an LTPS TFT backplane is used, the problem of large area laser annealing needs to be solved. At present, LTPS TFT backplanes are mainly used in production lines of the 6th generation and below. Samsung has already given up trying to make large-size OLED panels with LTPS TFT backplanes. Now, the industry generally believes that the use of oxide TFT backplanes has advantages in producing large-size OLEDs. Second, due to restrictions imposed by the evaporation machine, block evaporation must be performed. At present, the sixth generation line evaporation is carried out after two cuts. If it is a 10.5 generation line, vapor deposition may be required after four cuts. Third, the masks used for LCDs and OLEDs are different. The former is a lithographic version, while the latter is a lithographic version. High-generation lithography has matured, but the high-generation eroding technology still needs further development.

In addition, Digitime reports that the evaporation machine is also the LGD checkpoint. With the increase in the size of the substrate, there will be a problem of sagging in the middle, and the industry must try to solve it. Because the OLED panel must heat the RGB organic material under vacuum in a high temperature state and perform vapor deposition from the bottom up, if the central portion of the substrate sags, the RGB material will not be uniformly vaporized.

At the same time, LGD may also consider the printing process. The printing process is more advantageous for the production of large-size OLEDs at low cost, but the printing process is not mature and does not yet have the conditions for mass production. Xu Zheng pointed out that even if a good sample can be made now, the sample is far from the volume production. For example, each batch of electronic ink needs to ensure consistency, otherwise the nozzle and pressure will change. And now the large size is associated with 8K, if the nozzle accuracy is not enough, can not produce high-resolution OLED panel.