The OLED industry is facing a competition between Chinese and Korean companies. Is overcapacity just around the corner?

On October 26, BOE's Chengdu 6th generation flexible OLED (Organic Light-Emitting Diode) panel production line went into mass production. This is China's first and the world's second 6th generation flexible OLED panel line in mass production, breaking the monopoly of Korean companies in the flexible OLED panel market.

The upcoming Apple iPhone X has brought a wave of flexible OLED screens, but it has also thinned the current limited flexible screen resources. In the short term, although China has added a number of new suppliers, the global flexible OLED screen is still in short supply.

However, by 2020, more than 10 new 6th generation OLED panel production lines will be added around the world, and there is a long-term concern of oversupply. New forms of mobile terminal products such as mobile phones, tablets, and laptops "three in one" will stimulate new demand.

China and South Korea compete for supremacy

Zhang Yu, vice president of BOE, said that BOE's Chengdu 6th generation OLED line, with a total investment of 46.5 billion yuan, went into mass production on October 26 and is scheduled to reach full production next year. The designed capacity for full production is 48,000 substrates (1850mm×1500mm) per month.

Song Yu, an analyst at Aowei Cloud Network, believes that Korean factories currently occupy almost all flexible OLED production capacity, and BOE's flexible OLED mass production has opened the prelude to Chinese companies breaking the monopoly of Korean companies. In the next few years, the increase in flexible OLED production capacity will mainly come from panel factories such as Samsung and BOE in mainland China. By 2020, mainland China will become the region with the largest OLED production capacity outside of South Korea.

Zhang Yu believes that the competition in the global panel industry will evolve from the current competition among "three countries and four regions" (South Korea, Japan, mainland China, and Taiwan) to "competition between two powers (China and South Korea)". Song Yu also said that the global competition in the new OLED display industry has begun to gradually shift from South Korea's dominance to mainland China.

It is understood that Japanese companies were the first to develop OLED, but had decided to withdraw completely. Now Japan Display (JDI) and Sharp, which was acquired by Foxconn, are planning to launch the 6th generation OLED panel production line again; while Taiwan has been following OLED, but has not yet supplied it in batches.

Samsung Electronics of South Korea started to produce OLED in 2000 and flexible OLED in 2005, and has accumulated more than 10 years of production process experience. To catch up, emerging Chinese companies need to continue to explore and innovate.

According to Geng Yi, deputy secretary general of the China OLED Industry Alliance, China's OLED production line construction has begun to take shape, gradually transitioning from technology research and development to large-scale production. In 2016, the total shipment of domestically produced OLED panels in mainland China reached 6 million pieces. Three 5.5-generation OLED lines and two 4.5-generation OLED lines have entered the mass production stage, and two 6-generation OLED lines have been lit up (one of which is in mass production). In addition, Chinese companies are accelerating the layout of OLED flexible panels. Currently, all seven 6-generation production lines in China are flexible production lines, and it is expected that shipments will begin in early 2018.

However, Song Yu also calmly pointed out that there is still a clear gap between the Chinese OLED industry and Korean companies in terms of technology and production capacity. At present, in addition to quickly passing the two basic stages of capacity ramp-up and yield improvement, Chinese mainland companies must also focus on solving the embarrassing situation of being controlled by others in the upstream core equipment and materials in the long run. In particular, evaporation equipment and luminescent materials have restricted the development of the mainland OLED industry to a certain extent.

The overcapacity debate

As many 6th generation OLED production lines are being put into operation in China, some people are worried that there will be a hidden danger of overcapacity in OLED screen production in the future.

However, IHS analyst Wu Rongbing believes that in the short term, because Apple's entry will dilute resources, and it will take time for China's new suppliers to ramp up production, the global flexible OLED screen will be in short supply.

Wu Rongbing gave an example, saying that Samsung supplied nearly 100 million OLED screens to Chinese mobile phone companies this year; next year, because Apple mobile phones also use OLED screens, the supply of OLED screens will become even tighter, and Samsung is expected to supply only 80 million OLED screens to Chinese mobile phone companies next year.

"This year, Sinotruk, BOE, and Everdisplay will supply a total of 5 million OLED screens. BOE's Chengdu 6th generation line is expected to achieve planned production capacity only in the second quarter or second half of 2018. Therefore, it will be difficult to fill the gap in the short term."

IHSMarkit report pointed out that AMOLED is used in digital cameras, tablet computers, mobile phones, near-eye head-mounted displays (AR and VD devices), OLED TVs and smart watches, among which mobile phones use the largest number of AMOLED panels. In 2016, AMOLED panel shipments reached 416 million pieces, of which 390 million pieces were mobile phone panels. It is expected that AMOLED mobile phone panel shipments will increase to 513 million pieces in 2017. Between 2016 and 2020, the global flexible AMOLED production capacity will expand from 1.5 million square meters to 20.1 million square meters, and flexible AMOLED will have broad market development space.

Li Yaqin, deputy general manager of Qunzhi Consulting, also said that in the short term, flexible OLED screens are in short supply. Apple's iPhone X alone will have 80 million flexible OLED screens in stock by the end of this year, and Samsung's S8 and Note8 will also consume 60 to 70 million flexible OLED screens this year. However, the global supply of flexible OLED screens this year is only 150 million, which is obviously less than the demand.

However, Li Yaqin believes that as mainland China actively deploys 6th generation OLED lines, there will be an oversupply of small and medium-sized OLEDs in the long run.

According to Qunzhi Consulting, in 2017, the world added 4 new 6th generation flexible OLED production lines, including BOE Chengdu, LGD, and Tianma Wuhan (expected to be put into production in November and December this year), and Samsung has a 6th generation flexible OLED line expansion. In the next three years from 2018 to 2020, the world will add 12 small and medium-sized OLED production lines, of which 6 are in mainland China (mostly 6th generation lines, and there are Truly's 4.5th generation line and Royole's 5.5th generation line).

"In 2020, the supply and demand situation is not optimistic." Li Yaqin said that it is not ruled out that BOE and LGD will expand production, and the competition for prices and customers will intensify. It is expected that by 2020, the application of OLED in mobile phones will exceed 45%; by 2022, the penetration rate will reach 60%.

Only when disruptive product forms emerge can real consumer desire be aroused. Zhang Yu revealed that "future flexible OLED products will be in the form of thin films, which may be mobile products that are a 'three-in-one' of mobile phones, tablets, and laptops."

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.