CLSA sees lower demand for OLED displays in China in 2018, updates on OLED production ramp-up

Financial analysts from CLSA released an interesting short report about OLED demand in China. According to IDC, OLED smartphone shipments in China was down 6% in Q4 2017 (compared to Q4 2016) to 36 million units - in line with total Chinese smartphone weakness (-8% in the same period). Total OLED smartphone shipments in 2017 reached 128 million, up 8% compared to 2016. OLED penetration was up only 1% (to 15%) in 2017.

Oppo R11s photo

CLSA sees lower demand in 2018 and 2019 compared to early estimates - 175 million in 2018 and 225 million in 2019. That's 11% (2018) and 20% (2019) lower than CLSA's earlier estimates. CLSA is less optimistic than before regarding the ramp-up at Tianma, Truly and CSoT.

Chinese OLED makers shipped almost 10 million OLED panels in 2017

Market research company Sigmaintell estimates that China-based display makers shipped 9.8 million OLED displays in 2017, mostly for smartphone applications. Everdisplay was the largest producer in terms of units, shipping 3.8 million displays (enjoying large orders from Huawei and Hisense), while Visionox was the top vendor in terms of display area shipped (30,000 square meters, out of a total 78,000 sqm produced in China in 2017).

Everdisplay HQ and 5.5-Gen Fab photo

Looking into 2018, Sigmaintell sees a large increase in production volume in 2018. Visionox landed orders from ZTE and Xiaomi and is expanding its production capacity, and BOE is also expected to increase shipments from its flexible 6-Gen AMOLED fab that will enter full capacity in Q2 2018. Finally, Tianma is also expected to increase production having won orders from Asustek Computer.

Reports from Korea suggest that Apple decided to discontinue the iPhone X

We already heard several reports that Apple is reducing its OLED display orders from Samsung (from an estimated 40 million in Q1 2018 to 20 million) - following lower than expected iPhone X sales.

Apple iPhone X photo

New reports from Korea now suggest that Samsung display also announced to its own suppliers that it will not order any more parts for the iPhone X in H2 2018. It could mean that Apple is aiming to introduce new OLED phones in 2018, but the Korean reports say that it is also likely that Apple is not looking to introduce a new OLED iPhone in 2018 at all.

Samsung reports a strong quarter, will not be affected by Apple's lower iPhone X sales much, commits to a foldable phone in 2018

Samsung Electronics reported its results for Q4 2017, with a record quarterly profit of $11.2 billion driven by strong demand for memory chips and high-end displays. Samsung Display reports increased OLED shipments for premium smartphones.

Samsung A8 2018 photo

Looking at Q1 2018, SDC says that its OLED business is likely to be affected be declining demand due to seasonality and increased competition from LTPS LCD. For the the whole of 2018, SDC expects OLED to increase its penetration in the smartphone industry, and the company aims to introduce new premium applications such as foldable displays and OLEDs for the automotive market.

Apple expects iPhone X shipments in Q1 2018 to be half what it originally estimated

In the last few weeks we heard several reports that Apple is seeing lower iPhone X sales than initially expected. Japan's Nikkei Asian Review now claims that Apple slashed its iPhone X production target for Q1 2018 from 40 million units to only 20 million.

Apple iPhone X side photo

Asian Review also says that the lower sales could result in a delay to Apple's plans to introduce OLED displays in its new iPhone models in 2018. It was indeed reported last week that Apple may cancel its plans to introduce a new 5.8" OLED iPhone in 2018, and only launch the larger 6.5" OLED iPhone (with screens provided by LG Display).

LG Display to supply Sony with P-OLED displays for future smartphones

According to Business Korea, LG Display signed an agreement with Sony to supply it with flexible P-OLED displays for future Sony smartphones. Sony is not a major smartphone player globally, but in Japan it holds 14.9% of the market (second only to Apple).

LG V30 photoLG V30 P-OLED Smartphone

LG Display is already supplying Sony with OLED displays for Sony's OLED TVs, and reportedly in 2017 Sony requested LGD to double its OLED panel shipments as demand for Sony's OLED TVs has been better than expected.

ETNews: Samsung's A3 fab utilization drops 10% due to lower OLED shipments to Apple

In a somewhat confusing article, ETNews claims that Samsung Display's utilization rate at its A3 flexible OLED line has fallen more than 10% compared to 2017 as the company sees decreased shipments to Apple. This is yet another sign that Apple is seeing lower iPhone X sales than initially expected.

ETNews says that Q1 is always a seasonally low quarter, but this year's utilization rate is lower than what Samsung experienced in Q1 2017. ETNews says that Apple's share of the A3 capacity was about 77%, with the rest of the production going for Samsung Electronics and Chinese phone makers.

Digitimes: Apple may ditch its 6-inch OLED iPhone for 2018 and launch only the 6.5" OLED one

In November 2017 KGI Securities analyst Ming-Chi Kuo estimated that Apple will launch three new iPhone models in 2018 - two of these will sport OLED displays, the 5.8" and 6.5" models. A new report from Digitimes, however, says that Apple may eventually only launch the larger (6.5-inch) OLED variant in 2018.

Digitimes one 2018 OLED iPhone scenario (KGI)

According to Digitimes, Apple is developing four new iPhones: two LCD Models (5.8" and 6") and two OLED Models (6" and 6.5"), but it may abandon the smaller OLED variant. This is mostly due to lower than expected iPhone X sales.

CLSA: BOE to ship 19 million smartphone flexible OLEDs in 2018 and 41 million in 2019

BOE started to produce flexible OLED displays at its first flexible AMOLED line, the Chengdu B7 6-Gen fab, in October 2017. Financial analysts from CLSA say that according to their checks, the ramp-up at the B7 is ahead of schedule, and CLSA expects BOE to ship 19 million smartphone OLEDs in 2018 and 41 million panels in 2019.

BOE Flexible AMOLED prototype photo

CLSA says that major Chinese smartphone makers will launch the first smartphones that use BOE's flexible OLEDs in February and March or 2018. CLSA says it won't be surprised to hear BOE announcing new OLED fab plans soon (in H1 2018).

Some of Google's Pixel 2 XL P-OLED displays are better than originally reported

Google 's Pixel 2 XL (which started shipping in October 2017) is one of the first two phones to adopt LG Display's new 6" 1440x2880 (538 PPI) P-OLEDs (alongside with LG's own V30). While on paper these displays are superb, actual reviews were rather dismal - as both reviewers and customers complained about bad color reproduction, graininess and problematic viewing angles. In addition many users seem to report serious image retention issues.

According to reports in 2017, LGD faced very low yields at its 6-Gen E5 line, and so had to produce these smartphone displays at its Gen-4.5 flexible AMOLED line. Some users are now saying that these issues do not plague all of Google's phone - and some come with noticeable better displays. This should be good news for LGD and it's likely that as the company gains more experience with smartphone P-OLED production, it will produce better looking displays in better yields.