South Korea's OLED industry is influenced by Japan's vapor deposition machines. Who will be the ultimate winner?

Samsung and LG of South Korea are actively reducing their LCD production capacity, selling or converting a large number of LCD production lines to OLED. Currently, Samsung and LG have divided the small and medium-sized screen and large-screen markets respectively in the international OLED display market, and the previous generation of kings - Japanese companies - seem to be missing.

From dominating the world to retreating to a corner

After World War II, Japan relied on ships, automobiles and televisions as the pillars of its economy during its postwar reconstruction. At that time, Samsung and LG (then Venus) of South Korea, as the younger brothers of neighboring countries, began to enter the television industry by importing technology and components from Hitachi and Sanyo.

At that time, Japan was the leader in the field of technology and image quality. However, this obsession later became the source of the decline of Japanese television. At the end of the last century, LCD technology was implemented, but it was sneered at by TV companies such as Sony and Panasonic because the image quality was not as good as CRT.

The following story is well known to everyone. LCD quickly occupied the market due to price and size factors, and gradually solved the problems in image quality after mass production. Korean companies that bet on the right thing successfully ascended to the throne, while Japanese companies gradually declined and were even surpassed by the rising star China. From the following two pictures, you can intuitively see the changes in Japan's display industry.

In recent years, Japanese display companies have frequently sold their businesses to "slim down", while Chinese home appliance companies have started the acquisition mode. In 2016, Hon Hai Group acquired Sharp for 700 billion yen; in the same year, Toshiba's white appliance business was sold to Midea Group; earlier, Sanyo's home appliance business was sold by Panasonic to Haier.

In today's market environment, Chinese companies dominate the LCD market, while South Korea's Samsung and LG dominate the OLED market. Japan, once the king, seems to have made no achievements in the display field. Many once glorious brands have given up the global market and chosen to retreat to their home country. Does it seem that Japan has been marginalized in the display field?

The Japanese lost, but is this really the case?

Not necessarily.

Take OLED technology, which is now regarded as the future of the display industry, as an example. On the surface, Samsung and LG have almost divided up the entire OLED market, and Japanese TV manufacturers are conservative about OLED TVs. But in fact, the key equipment for OLED panel production - the vacuum evaporation machine, is monopolized by Japan.

The vacuum deposition machine is produced in a small factory called Canon TOKKI, located in Mitsuke City, a port city on the north coast of Honshu Island, Japan. It has only 343 employees, but it can create billions of dollars in output value every year. The work of the deposition machine is to attach the OLED light-emitting material to the glass substrate, which is indispensable in the production and manufacturing of OLED. However, Canon TOKKI can only produce nine deposition machines a year, and manufacturers often have to wait for more than two years to receive orders. It is not an exaggeration to say that it holds the throat of the OLED industry.

To produce OLED panels, Canon TOKKI's vacuum deposition machine is like a ticket to enter the market. In order to snatch Apple's iPhone OLED screen orders from Samsung, LG recently spent more than 200 million US dollars to finally "grab" two deposition machines from Canon TOKKI, which has a large number of orders. It is expected to deliver one at the end of this year and one at the beginning of next year, which will bring LG a monthly production capacity of 30,000 sixth-generation OLED panels.

In addition to Canon TLKKI, there are a large number of Japanese companies that play an important role in the OLED production chain. For example, the evaporation masks required for OLED production are mostly produced by Dai Japan Printing Co., Ltd., glass substrates are manufactured by Nippon Electric Glass Co., Ltd., and OLED luminescent materials are produced by Idemitsu Kosan of Japan.

It is also worth mentioning that the OLED printing technology, which is not yet mature and is 90% cheaper than the vapor deposition technology, is the closest to being completed by Japan's Mitsubishi Chemical. In the field of broadcasting and television where high-end OLED monitoring equipment is widely used, the Japanese company Sony has formed a near-monopoly.

In other words, we feel that Japanese brands are gradually disappearing, mainly because Japanese companies are shrinking their 2C business. However, Japan still has a say in the upstream of the industry.

The sales and manufacturing market that Japan has gradually given up is also a battlefield that China has been actively deploying. In addition to taking over the overseas authorization of Japanese brands, Chinese companies have already mastered the production and manufacturing of LCD panels, and even Samsung and LG of South Korea have gradually given up on confronting us head-on and started to move away from liquid crystal. In the field of OLED, China has not been left behind.

The above table shows the OLED panel production lines that are currently in operation, under construction, or about to be built in China. Almost all Chinese panel manufacturers have made some arrangements. After these production lines enter the capacity release period in the next 3-5 years, the gap between China and South Korea's display industry will continue to narrow. As for further progress in the upstream of display technology and reaching the same level as Japan, it may take a longer period of industry accumulation.

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.