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China IC industry outlook


October 17, 2017

SEMI, the global industry association and provider of independent electronics market research, today announced its new China IC Industry Outlook Report, a comprehensive report for the electronics manufacturing supply chain. With an increasing presence in the global semiconductor manufacturing supply chain, the market opportunities in China are expanding dramatically.

China is the largest consumer of semiconductors in the world, but it currently relies mainly on semiconductor imports to drive its growth. Policies and investment funds are now in place to further advance the progress of indigenous suppliers in China throughout the entire semiconductor supply chain. This shift in policy and related initiatives have created widespread interest in the challenges and opportunities in China.

With at least 15 new fab projects underway or announced in China since 2017, spending on semiconductor fab equipment is forecast to surge to more than $12 billion, annually, by 2018. As a result, China is projected to be the top spending region in fab equipment by 2019, and is likely to approach record all-time levels for annual spending for a single region.

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This report covers the full spectrum of the China IC industry within the context of the global semiconductor industry. With more than 60 charts, data tables, and industry maps from SEMI sources, the report reveals the history and the latest industry developments in China across vast geographical areas ranging from coastline cities to the less developed though emerging mid-western regions.

The China IC industry ecosystem outlook covers central and local government policies, public and private funding, the industry value chain from design to manufacturing and equipment to materials suppliers. Key players in each industry sector are highlighted and discussed, along with insights into China domestic companies with respect to their international peers, and potential supply implications from local equipment and material suppliers. The report specifically details semiconductor fab investment in China, as well as the supply chain for domestic equipment and material suppliers.

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Figure 2

Sun Chemical has entered into a license agreement to introduce a new family of molecular inks for the printed electronics market with Groupe Graham International (GGI), a world leader in user interface technologies in touch applications, and the National Research Council of Canada (NRC).

The new molecular ink technology developed by GGI and the NRC will be produced by Sun Chemical and promoted collaboratively by all three organizations. Based on ionic molecules processed through a reduction process, the new IPS family of products will offer a viable alternative to conventional polymer thick film conductive inks and serve as a low-cost alternative to nano materials.

The robust IPS family of products include silver and copper metallization options that can be applied by screen, inkjet or other high speed printing methods. The molecular inks feature sub-micron trace thickness that will enable the production of narrow traces in thin dielectric layers on a variety of applications, including: in-mold electronics (IME), printed antenna, displays, EMI/RFI and sensors.

“The IPS platform has been a multi-year development effort with the NRC and we are pleased to have its value validated by a global market leader,” said Eric Saint-Jacques, Chief Executive Officer at GGI. “We feel privileged to be working with Sun Chemical and look forward to supporting their global go-to-market initiatives with our solution design and manufacturing services.”

“We’re excited to help bring this innovative product line to the market,” said Roy Bjorlin, Global Commercial and Strategic Initiatives Director, Sun Chemical Advanced Materials. “Customers will be pleased to have an option in the marketplace that features fine lines for printed electronics. We look forward to collaborating with GGI and the NRC on this project.”

“We’re excited to enter the next phase of development,” said Thomas Ducellier, Executive Director, Printable Electronics Program, National Research Council of Canada.  “We look forward to seeing the unique attributes of the molecular ink platform address emerging market needs.”

GGI specializes in the design, engineering and manufacturing of customized electro-mechanical assemblies to deliver the optimal user interface for each specific context and environment.

Gartner, Inc. this week highlighted the top strategic technology trends that will impact most organizations in 2018. Analysts presented their findings during Gartner Symposium/ITxpo, which took place through Thursday.

Gartner defines a strategic technology trend as one with substantial disruptive potential that is beginning to break out of an emerging state into broader impact and use, or which are rapidly growing trends with a high degree of volatility reaching tipping points over the next five years.

“Gartner’s top 10 strategic technology trends for 2018 tie into the Intelligent Digital Mesh. The intelligent digital mesh is a foundation for future digital business and ecosystems,” said David Cearley, vice president and Gartner Fellow. “IT leaders must factor these technology trends into their innovation strategies or risk losing ground to those that do.”

The first three strategic technology trends explore how artificial intelligence (AI) and machine learning are seeping into virtually everything and represent a major battleground for technology providers over the next five years. The next four trends focus on blending the digital and physical worlds to create an immersive, digitally enhanced environment. The last three refer to exploiting connections between an expanding set of people and businesses, as well as devices, content and services to deliver digital business outcomes.

The top 10 strategic technology trends for 2018 are:

AI Foundation
Creating systems that learn, adapt and potentially act autonomously will be a major battleground for technology vendors through at least 2020. The ability to use AI to enhance decision making, reinvent business models and ecosystems, and remake the customer experience will drive the payoff for digital initiatives through 2025.

“AI techniques are evolving rapidly and organizations will need to invest significantly in skills, processes and tools to successfully exploit these techniques and build AI-enhanced systems,” said Mr. Cearley. “Investment areas can include data preparation, integration, algorithm and training methodology selection, and model creation. Multiple constituencies including data scientists, developers and business process owners will need to work together.”

Intelligent Apps and Analytics
Over the next few years, virtually every app, application and service will incorporate some level of AI. Some of these apps will be obvious intelligent apps that could not exist without AI and machine learning. Others will be unobtrusive users of AI that provide intelligence behind the scenes. Intelligent apps create a new intelligent intermediary layer between people and systems and have the potential to transform the nature of work and the structure of the workplace.

“Explore intelligent apps as a way of augmenting human activity and not simply as a way of replacing people,” said Mr. Cearley. “Augmented analytics is a particularly strategic growing area which uses machine learning to automate data preparation, insight discovery and insight sharing for a broad range of business users, operational workers and citizen data scientists.”

AI has become the next major battleground in a wide range of software and service markets, including aspects of enterprise resource planning (ERP). Packaged software and service providers should outline how they’ll be using AI to add business value in new versions in the form of advanced analytics, intelligent processes and advanced user experiences.

Intelligent Things
Intelligent things are physical things that go beyond the execution of rigid programming models to exploit AI to deliver advanced behaviors and interact more naturally with their surroundings and with people. AI is driving advances for new intelligent things (such as autonomous vehicles, robots and drones) and delivering enhanced capability to many existing things (such as Internet of Things [IoT] connected consumer and industrial systems).

“Currently, the use of autonomous vehicles in controlled settings (for example, in farming and mining) is a rapidly growing area of intelligent things. We are likely to see examples of autonomous vehicles on limited, well-defined and controlled roadways by 2022, but general use of autonomous cars will likely require a person in the driver’s seat in case the technology should unexpectedly fail,” said Mr. Cearley. “For at least the next five years, we expect that semiautonomous scenarios requiring a driver will dominate. During this time, manufacturers will test the technology more rigorously, and the nontechnology issues such as regulations, legal issues and cultural acceptance will be addressed.” 

Digital Twin
A digital twin refers to the digital representation of a real-world entity or system. Digital twins in the context of IoT projects is particularly promising over the next three to five years and is leading the interest in digital twins today. Well-designed digital twins of assets have the potential to significantly improve enterprise decision making. These digital twins are linked to their real-world counterparts and are used to understand the state of the thing or system, respond to changes, improve operations and add value. Organizations will implement digital twins simply at first, then evolve them over time, improving their ability to collect and visualize the right data, apply the right analytics and rules, and respond effectively to business objectives.

“Over time, digital representations of virtually every aspect of our world will be connected dynamically with their real-world counterpart and with one another and infused with AI-based capabilities to enable advanced simulation, operation and analysis,” said Mr. Cearley. “City planners, digital marketers, healthcare professionals and industrial planners will all benefit from this long-term shift to the integrated digital twin world.”

Cloud to the Edge
Edge computing describes a computing topology in which information processing, and content collection and delivery, are placed closer to the sources of this information. Connectivity and latency challenges, bandwidth constraints and greater functionality embedded at the edge favors distributed models. Enterprises should begin using edge design patterns in their infrastructure architectures — particularly for those with significant IoT elements.

While many view cloud and edge as competing approaches, cloud is a style of computing where elastically scalable technology capabilities are delivered as a service and does not inherently mandate a centralized model.

“When used as complementary concepts, cloud can be the style of computing used to create a service-oriented model and a centralized control and coordination structure with edge being used as a delivery style allowing for disconnected or distributed process execution of aspects of the cloud service,” said Mr. Cearley.

Conversational Platforms
Conversational platforms will drive the next big paradigm shift in how humans interact with the digital world. The burden of translating intent shifts from user to computer. The platform takes a question or command from the user and then responds by executing some function, presenting some content or asking for additional input. Over the next few years, conversational interfaces will become a primary design goal for user interaction and be delivered in dedicated hardware, core OS features, platforms and applications.

“Conversational platforms have reached a tipping point in terms of understanding language and basic user intent, but they still fall short,” said Mr. Cearley. “The challenge that conversational platforms face is that users must communicate in a very structured way, and this is often a frustrating experience. A primary differentiator among conversational platforms will be the robustness of their conversational models and the application programming interface (API) and event models used to access, invoke and orchestrate third-party services to deliver complex outcomes.” 

Immersive Experience
While conversational interfaces are changing how people control the digital world, virtual, augmented and mixed reality are changing the way that people perceive and interact with the digital world. The virtual reality (VR) and augmented reality (AR) market is currently adolescent and fragmented. Interest is high, resulting in many novelty VR applications that deliver little real business value outside of advanced entertainment, such as video games and 360-degree spherical videos. To drive real tangible business benefit, enterprises must examine specific real-life scenarios where VR and AR can be applied to make employees more productive and enhance the design, training and visualization processes.

Mixed reality, a type of immersion that merges and extends the technical functionality of both AR and VR, is emerging as the immersive experience of choice providing a compelling technology that optimizes its interface to better match how people view and interact with their world. Mixed reality exists along a spectrum and includes head-mounted displays (HMDs) for augmented or virtual reality as well as smartphone and tablet-based AR and use of environmental sensors. Mixed reality represents the span of how people perceive and interact with the digital world.

Blockchain
Blockchain is evolving from a digital currency infrastructure into a platform for digital transformation. Blockchain technologies offer a radical departure from the current centralized transaction and record-keeping mechanisms and can serve as a foundation of disruptive digital business for both established enterprises and startups. Although the hype surrounding blockchains originally focused on the financial services industry, blockchains have many potential applications, including government, healthcare, manufacturing, media distribution, identity verification, title registry and supply chain. Although it holds long-term promise and will undoubtedly create disruption, blockchain promise outstrips blockchain reality, and many of the associated technologies are immature for the next two to three years.

Event Driven
Central to digital business is the idea that the business is always sensing and ready to exploit new digital business moments. Business events could be anything that is noted digitally, reflecting the discovery of notable states or state changes, for example, completion of a purchase order, or an aircraft landing. With the use of event brokers, IoT, cloud computing, blockchain, in-memory data management and AI, business events can be detected faster and analyzed in greater detail. But technology alone without cultural and leadership change does not deliver the full value of the event-driven model. Digital business drives the need for IT leaders, planners and architects to embrace event thinking.

Continuous Adaptive Risk and Trust
To securely enable digital business initiatives in a world of advanced, targeted attacks, security and risk management leaders must adopt a continuous adaptive risk and trust assessment (CARTA) approach to allow real-time, risk and trust-based decision making with adaptive responses. Security infrastructure must be adaptive everywhere, to embrace the opportunity — and manage the risks — that comes delivering security that moves at the speed of digital business.

As part of a CARTA approach, organizations must overcome the barriers between security teams and application teams, much as DevOps tools and processes overcome the divide between development and operations. Information security architects must integrate security testing at multiple points into DevOps workflows in a collaborative way that is largely transparent to developers, and preserves the teamwork, agility and speed of DevOps and agile development environments, delivering “DevSecOps.” CARTA can also be applied at runtime with approaches such as deception technologies. Advances in technologies such as virtualization and software-defined networking has made it easier to deploy, manage and monitor “adaptive honeypots” — the basic component of network-based deception.

Gartner clients can learn more in the Gartner Special Report “Top Strategic Technology Trends for 2018.” Additional detailed analysis on each tech trend can be found in the Smarter With Gartner article “Gartner Top 10 Strategic Technology Trends for 2018.”

In a flexible display, the backplane, frontplane, and any encapsulants are all made from flexible materials. To date, such displays have been used primarily because they are thinner, lighter, and more durable than comparable rigid displays, and to a lesser extent because they are conformable to rigid but non-flat surfaces in devices such as mobile phone handsets, automobile dashboards, and appliance control panels.

In 2017, key flexible display components achieved cost and performance parity with their rigid counterparts for the first time, thus removing a key market barrier and opening the door to rapid adoption in a variety of otherwise-rigid devices such as e-readers and wearables. Such displays may also be incorporated into truly flexible devices such as credit cards, shelving labels, and smart signage, and in the near future they may form the basis of rollable and foldable devices that define entirely new market categories.

According to a new report from Tractica, the four leading technologies in flexible displays are LED, LCD, OLED, and e-paper, and the main applications for these technologies are phones and tablets, wearables, shelving labels, signage, automotive dashboards, appliance control panels, TV and video displays, smart cards, e-writers, and e-readers. The market intelligence firm forecasts that flexible display shipments will increase from 169.9 million units in 2017 to 642.6 million units annually by 2022.

“The effect of flexible and conformable displays will be transformational,” says senior analyst Wil McCarthy. “They will literally change the appearance and function of our personal devices, our vehicles, our homes, and the built environment.”

Tractica’s report, “Flexible Displays”, examines the market trends and technology issues surrounding flexible displays and presents 6-year market forecasts, segmented by world region, for flexible display unit shipments, square meters, device pricing and revenue, and software applications during the period from 2017 through 2022. Flexible display applications are analyzed in depth, and the report also includes detailed profiles of 13 key industry players. An Executive Summary of the report is available for free download on the firm’s website.

The large thin film transistor (TFT) display market is expected to continue to expand in 2017 despite slower end-market demand, according to IHS Markit (Nasdaq: INFO).

While unit shipments are expected to be up 1 percent in 2017 to 688 million units, compared to the previous year, area shipment forecasts show growth of 6 percent in the same period, to 180 million square meters.

Figure 1

Among displays of 9 inches or larger, tablet PC displays are on track to record the highest year-on-year growth in unit shipments in 2017, with 10 percent growth to 93 million units. “It is because first-tier set brands are increasing the number of tablet PC models with larger screens. The new 10.5-inch iPad pro is a good example,” said Peter Su, principal analyst at IHS Markit.

The second fastest-growing application is notebook PC displays, with a 4 percent year-on-year growth to about 175 million units. “Chinese panel makers are aggressively trying to expand in this market, while first-tier panel makers are actually retreating panel production,” Su said.

On the flip side, TV displays are showing a contraction in 2017 by 3 percent year on year, dropping to 257 million units due to slower end-market demand. “Prices of large displays, particularly TV panels, have stayed high for almost a year. TV brands started revising down their business plan, cutting their panel purchases,” Su said.

In terms of area shipments, however, large displays for all applications are forecast to see growth in 2017 as larger screens become more popular with consumers. TV display accounts for 78 percent of total large display shipments by area, and is expected to see a 5 percent growth in 2017.

“First-tier panel makers, especially South Korean companies, already started shifting their production to larger sizes — 49 inches or larger — while reducing production of smaller panels, with lower profitability, to achieve better financial performance,” Su said. “Chinese panel makers are following suit and started increasing production of larger TV displays to 43-inch or larger.”

For a panel manufacturer’s perspective, preparing for potential oversupply in the near future is another reason behind the TV size migration. New fabs are under construction in China, including 10.5 generation, and could increase supply significantly.  “One way for panel makers to overcome the oversupply is to increase area consumption via size migration,” Su said.

LG Display is expected to continue accounting for the largest market share in 2017 with 21 percent as measured by unit shipments. BOE, a Chinese display maker that has been increasing its shipments significantly, is forecast to take 20.7 percent, up 2 percentage points from 2016, gaining on LG Display.

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“As TV makers struggle to trigger replacement cycles, WCG and HDR and their notable picture quality improvements are the next growth drivers for the TV industry,” announced Eric Virey, Senior Market & Technology Analyst, LED, Sapphire & Displays at Yole Développement (Yole).

Various technologies are competing to deliver those features. In the short and mid-term, the best-positioned ones are OLED and the well-established, dominant, LCD technology supercharged with narrow-band phosphor LEDs or QD color converters in the backlight unit. Yole analysts delivered a deep analysis of the WCG display and QD technologies, status and prospects, roadblocks and key players with a dedicated technology & market report titled: Quantum Dots & Wide Color Gamut Display Technologies.

What is the status and benefits of QD technologies? After QD-Vision demise, what are the companies that can answer to the demand of the fast growing LCD market? How will the competitive landscape evolve, especially with OLED solutions?

wide color gamut

The “More than Moore” market research and strategy consulting company Yole offers you a snapshot of the QD technologies, its applications and the players involved.

Quantum Dots enable drastic enhancements of display color gamut. They do so with high efficiency, giving display makers headroom to increase brightness, contrast and gamut without increasing power consumption.

Their most common implementation is as color conversion films located in the LCD backlight unit. In this form, QDs are drop-in solutions that can be easily deployed on all sizes of displays without any process change or CapEx . QDs therefore enable the LCD industry to boost the performance of its products without major investment. This contrasts with OLEDs, which require building multibillion-dollar dedicated fabs.

However, QDs do not solve some of LCD shortcomings. Mostly, LCD still lag behind OLEDs in terms of response times, black levels and viewing angles. Also, LCDs cannot deliver pixel-level dimming, the strongest selling point for OLED displays. In the near future, QDs could substitute for LCD color filters. Unlike films, this configuration requires some process changes in LCD manufacturing.

However, it would double the display efficiency, further improve color gamut and provide viewing angles similar to OLED.

In the longer term, EL-QD could deliver OLED-like characteristics and performance, with improved brightness and stability.

“QDs and related technologies will take advantage of OLED TV capacity constraints,” says Dr Eric Virey from Yole.

LG Display is currently the only OLED TV panel manufacturer. The company announced that it will stop investing in LCD and build two new OLED TV manufacturing lines in Korea and China, slated to start production in late 2019. Cost and technology barriers to entry are high, and few other companies will be able to manufacture OLED TV panels in that timeframe. Unless OLED printing technologies progress fast enough to enable cost efficient manufacturing of large, full RGB displays, OLED TV adoption will therefore remain capacity-constrained to less than 12 million units per year until 2022.

QDs will take advantage of this window of opportunity to capture the lion’s share of the WCG and HDR TV market. Rapidly improving performance and decreasing cost is already enabling adoption to spread into mid-range, sub-US$1000 models opening a high volume markets still forbidden to OLED for cost and capacity reasons. Display makers will use QDs to keep extracting more value from existing LCD fab. For the long term, many are hedging their bets and looking at both RGB printed OLED and EL-QDs.

In the mid-term however, QDCF configurations represent an attractive opportunity to close the gap with OLED in term of viewing angles and widen it in term of gamut and efficiency. QDCF however requires some LCD manufacturing process changes. Although moderate compared to a new OLED fab, not every LCD maker will want to commit the required CapEx or even develop the technology.
In the longer term, both OLED and QD-enhanced LCD could face competition from new, disruptive technologies such as the already mentioned electroluminescent QDs or even microLEDs, which could drive a potential paradigm shift, offering alternatives to OLED in self-emissive display technologies. Other technological innovations could also disrupt the QD market. For example, commercialization of a narrow-band green phosphor could eliminate the performance gap between phosphors and QD films and enable a more cost-effective solution.

The overall utilization rate of display panel fabrication (fab) plants is expected to remain high in the third quarter of 2017, recording similar levels for the fifth consecutive quarter, according to IHS Markit (Nasdaq: INFO).

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Figure 1

According to the latest Display Production & Inventory Tracker by IHS Markit, the overall fab utilization rate is expected to reach 91 percent in the third quarter, up 1.8 percentage points from the previous quarter and up 1.1 percentage points from the same period last year.

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Figure 2

“One of the main contributing factors for higher utilization rates in the past few quarters is that display panel makers are making sure their inventories are optimized at healthy levels,” said Alex Kang, senior analyst at IHS Markit.

Production of large LCD panels, which take the majority of overall display production in terms of area, is expected to be 2.2 percent higher than actual shipments in the third quarter. This is a result of display makers wanting to build contingency, or wriggle room, in their utilization plans as part of their strategy to offset any unexpected lower utilization rates, which could trigger off higher costs.

“As a result, panel makers’ inventory will increase, but it will still remain within healthy ranges,” Kang said.

According to IHS Markit, panel makers are expected to keep high utilization rate throughout the second half of 2017. As production capacity increase has slowed down and panel makers are expected to keep managing inventory levels within healthy limits, they will still have some room to stock up from production surplus volumes.

The popularity of organic light-emitting diode (OLED) TVs and smartphones has boosted not only the OLED display market but also the OLED encapsulation materials market. According to IHS Markit(Nasdaq: INFO),  the OLED encapsulation materials market is expected to grow 4.7 percent in 2017 compared to a year ago, to $117 million.

“The market is forecast to grow even faster as Chinese and South Korean panel makers have aggressively invested in new OLED fabs, resulting in the increase in OLED shipments in terms of area,” said Richard Son, senior analyst at IHS Markit. In particular, South Korean Chinese panel makers recently announced new OLED fab investment plans for not only Gen 6 but also Gen 8.5 and even for Gen 10.5.

As a result of the investment, the OLED encapsulation materials market is forecast to reach $232.5 million by 2021, growing at a compound annual growth rate of 16 percent from 2017.

OLED_encapsulation_materials_market_forecast

Unlike thin-film transistor liquid crystal display (TFT-LCD), OLED displays require encapsulation as the organic elements are vulnerable to moisture. The OLED encapsulation materials can be categorized into metal, frit glass, thin-film encapsulation (TFE) and hybrid.

The metal type is expected to lead the market in terms of revenue because it is mainly used for OLED TVs whose growth is fastest. However, with Chinese smartphone brands releasing a wide range of new products with OLED panels, demand for frit glass encapsulation materials, which are currently applied to smartphones with rigid-OLED displays, will remain steady, though losing its market share.

According to the AMOLED Encapsulation Materials Report 2017 by IHS Markit, in terms of revenue, metal type encapsulation is expected to account for 50 percent and the frit glass type to take 43 percent in 2017, and 67 percent and 23 percent in 2021, respectively.

OLED_encapsulation_market_share_forecast_by_technology

“Hybrid encapsulation, which combines TFE with a barrier film, has high production cost and its flexibility is limited, and thus demand for the hybrid type will not increase significantly,” Son said. “However, the latecomers are focusing on the hybrid encapsulation as it has a lower technological entry barrier compared to TFE, allowing them to succeed in mass production faster than when using TFE.”

From a mid- and long-term perspective, the hybrid encapsulation materials market will continue to grow for a while. TFE and the hybrid type are expected to take 6 percent and 1 percent of the encapsulation materials revenue market in 2017, respectively, but they will grow to reach 7 percent and 3.5 percent respectively in 2021.

The AMOLED Encapsulation Materials Report 2017 by IHS Markit provides information about the entire range of OLED encapsulation materials shipments by technology and application, including five-year forecast. Latest industry trends, including new technology development trends, are also updated.

As the global TV market continues to struggle with unit volume growth overall in 2017 — now projected to decline for the second year in a row — attention has turned to the most profitable market segments. This includes larger screen sizes and advanced technologies like OLED, quantum dots, 4K and HDR, each of which helps boost average selling prices and profits. In fact, OLED TV revenues are forecast to grow 71 percent year-over-year in 2017, while 4K TV revenues will increase 31 percent year-over-year, according to IHS Markit (Nasdaq: INFO). A number of brands have adopted OLED technology into their TV lineups in 2017, including Sony, joining LG Electronics, the primary promoter of OLED.

In 2016, the share of TV shipments at $1,000 and higher price points amounted to 5 percent of units, but more than 20 percent of dollars. Largely this is driven by the rapid share growth of 4K, especially at the largest screen sizes, where the retail premium for 4K has held remarkably steady without impacting average size growth.

Within the $1,000 and higher market segment, OLED TV share has grown significantly during the past eight quarters, from 2.4 percent in first quarter 2015 to 13.8 percent in first quarter 2017. Looking forward, IHS Markit is forecasting OLED TV shipments to grow from 723k units in 2016, to 6.6 million units in 2021. However, due to the very high average selling price of OLED, the unit share of the $1,000-plus market will increase to a peak of 59 percent in 2019, before declining as 8K LCD TVs begin shipping with very high prices as well.

The average selling price of a 4K OLED TV in 2017, forecast at $2,247,  is nearly 6 times greater than the average LCD TV, and three times greater when looking at just the 50-inch-plus and larger size category. However, the introduction of quantum dot enabled LCD TVs more directly competes with OLED TVs at the highest price points. Quantum dot LCD TVs are expected to account for 4 percent of LCD TV shipments in 2017, rising to 15 percent by 2021, and exceeding OLED TV shipments in the process. Samsung is the dominant brand in the quantum dot LCD TV category, accounting for 90 percent of shipments in first quarter 2017.

By 2020, 8K LCD TVs will have launched in all regions, primarily at 65-inch and 75-inch screen sizes. At the early introduction stages, 65-inch 8K LCD TVs will carry a 35 percent premium against 65-inch 4K OLED TVs, but gradually reduce as capacity rapidly increases in LCD fabs optimized for 65-inch-plus screen sizes.

In the current, unprecedented phase of active matrix organic light emitting diode (AMOLED) panel factory build-out, flexible AMOLED capacity will expand from 1.5 million square meters to 20.1 million square meters between 2016 and 2020, at a compound annual growth rate of 91 percent. In 2016, flexible capacity, or factories with the ability to produce AMOLEDs on plastic substrates, only accounted for 28 percent of total capacity targeting mobile applications. This will increase to 80 percent by 2020 as almost every new Gen 6 fab and smaller factory built over the next four years will be flexible compatible, according to IHS Markit (Nasdaq: INFO).

AMOLED_capacity_targeting_mobile_applications_by_substrate_type

According to the Display Supply Demand & Equipment Tracker by IHS Markit, between 2016 and 2020, China, Japan and South Korea will build the equivalent of 46 new flexible AMOLED fabs, whose monthly capacity reaches 30,000 substrates, each. These fabs will add 18.6 million square meters of new plastic substrate production capability, more than 13 times the industry’s current level.

“All of the new capacity will facilitate a rapid increase in flexible AMOLED panel adoption in smartphones,” said Charles Annis, senior director at IHS Markit. “Nevertheless, as so much new flexible capacity is being added, it is starting to raise concerns that the market will not be able to absorb all of the potential output.”

IHS Markit forecasts that the tight AMOLED panel supply in 2016 will continually give way to a growing capacity-based glut. The supply is predicted to exceed demand by more than 45 percent in 2020, when 40 percent of smartphones will adopt AMOLED panels.

“AMOLED displays will offer excellent image quality and form factor advantages in high-end phones. Despite excessive capacity availability, the challenge to faster adoption will be costs,” Annis said. High manufacturing costs for most makers will keep average rigid AMOLED panel prices 40 percent above equivalent LCD panels, while flexible AMOLED panel prices will remain 100 percent higher. “Smartphone makers, targeting mid and low-end market segments, may want to buy flexible AMOLED panels, but are likely to be restricted by lingering high prices.”

To absorb all the new capacity in the pipeline, flexible AMOLED panels will need to expand the market beyond smartphones to tablet PCs, notebooks and new form factors enabled by foldable displays. Ultimately, the rapid growth of flexible AMOLED capacity and the resulting increase in panel production will help to lower costs, increase yields and improve quality. In the long-run, this will spur further adoption into more applications; however, to get there, the industry may first need to cycle through a difficult period of digesting the 46 new flexible fabs now being built.