Accelerated penetration of iPhone OLED panels boosted by the demand for doubling the share of OLED panels supplied by Chuanjing Oriental

At a time when the panel industry as a whole is in a downward cycle, head manufacturer BOE ushered in an important positive. According to recent media reports, the number of OLED panels supplied by BOE for iPhone is expected to increase exponentially next year. Stimulated by the news, Beijing Oriental A (000725.SZ) shares closed higher for two consecutive days.

According to industry sources, BOE will deliver 40 million to 45 million OLED panels for iPhone next year, including iPhone12 and 13 listed last year and this year, as well as next year's new iPhone14, which will ship nearly three times as much as this year. A reporter from the Financial Associated Press called and sent a letter to BOE to try to verify it, but there was no reply as of the press release.

Analysts told reporters that in the context of iPhone 12 and 13 shipping certification, BOE's supply share has further increased, which means that its OLED production capacity has reached a new height. At the same time, affected by the boost of demand, the trend of accelerated penetration of OLED in downstream applications is obvious.

Strong demand for OLED accelerating penetration in multiple application fields

Although overall demand and prices in the panel market have recovered significantly since August, demand for OLED panels has remained strong, driven by factors such as Apple's demand for new phones, and OLED's market penetration in many areas, such as smartphones, has continued to grow.

About 145 million AMOLED smartphone panels were shipped in the third quarter of this year, up 3.8 per cent from a year earlier, according to CINNO Research.

At present, Apple phones have OLED screens all over the phone, and the LCD model has long been discontinued. In the Chinese smartphone market, as of the third quarter of this year, the penetration rate of OLED screens was 49%, up 10% from the same period last year. In the future, as OLED costs continue to decline and infiltrate to the low end, replacing LTPS-TFT LCD will become a medium-and long-term trend. " Liu Yushi, a senior analyst at CINNO Research, told reporters.

(global share of AMOLED smartphone panels in the third quarter, data source: CINNO Research)

At the same time, the demand for OLED in medium-sized markets such as laptops is also opening up. Shipments of OLED notebook panels are expected to reach 4.7 million in 2021, a year-on-year increase of 395%, according to Omdia, another market survey agency. However, only Samsung has shown that rigid OLED notebook panels have been developed, and local manufacturers and 688538.SH plan to supply the laptop brand next year.

"flexible OLED will gradually occupy most of the mobile market, including smartphones, wearable, etc., while rigid OLED will shift to medium-sized notebook market, with advantages such as light and thin, it is expected to quickly occupy a certain market share." Liu Yushi said.

002387.SZ, which has the second largest shipments of OLED panels in China, said at the investor exchange event on October 30th that the application of AMOLED in vehicles is a very important application scene in the field of medium size after tablets and laptops, but the car screen requires higher reliability and needs a training period.

The capacity utilization of the relevant manufacturers is also increasing rapidly. According to CINNO Research statistics, the average crop movement rate of domestic OLED panel factories was 64.9% in October, an increase of 6.2 percentage points over September.

Some securities firms believe that with the improvement of capacity utilization, the head OLED manufacturers are expected to achieve the profitability of the business next year.

Mo Wenyu team of Changjiang Electronics said that JD.com Fang flexible OLED reduces losses quarter by quarter, the share of major customers in North America is expected to continue to increase in the future, and the overall OLED is expected to turn losses into profits in 22 years. According to its estimates, the revenue potential of BOE's single flexible sixth-generation line is more than 40 billion yuan, and the company's revenue from Chengdu, Mianyang and Chongqing is expected to exceed 120 billion. According to the expected profit margin of 8-10%, the potential profit space is expected to exceed 10 billion yuan.

At present, in addition to BOE, Vicino and Huihui Optoelectronics, TCL Technology (000100.SZ)'s TCL Huaxing and Deep Tianma (000050.SZ) are also active in the field of OLED panels.

Catch up with Han Chang? There is still a gap between the gradual increase in share and the technology.

Currently, Samsung has about 60% of iPhone OLED's share, compared with less than 10% for BOE. According to the previous calculation of the growth of shipments, BOE is expected to challenge its position as the second supplier in the iPhone OLED panel market next year and the year after next.

CINNO Research believes that as BOE successfully supplies AMOLED mobile phone products to Apple and the production capacity of mainland panel manufacturers continues to release, it will be a long-term trend for Chinese mainland panel manufacturers to continue to replace Korean panel manufacturers; it is expected that by 2024, mainland OLED panel production capacity will become the first in the world.

So can Continental Panel Factory replicate the catch-up process achieved in the LCD field that year?

Liu Yushi told reporters that bellwether Samsung will not easily give up the first-mover advantages of many years and the advantages of OLED technology, patents and industrial chain cultivated by huge amounts of money, and because there are many differences, OLED will not simply repeat the development path of LCD.

Take iPhone as an example, this year, iPhone13 uses LTPO (low temperature polycrystalline oxide) technology for the first time in high-end (Pro) models, which is exclusively supplied by Samsung display. This technology can achieve the low power environment required for high refresh rate, which is more difficult than the existing LTPS (low temperature polysilicon) technology. LG shows that LTPO-style OLED panels are expected to be available from next year, but BOE will not be available until 2023 at the earliest.

In the field of large-size OLED TV panels, Korean manufacturers have obvious advantages, only LG shows can be supplied, while Samsung held a QD-OLED panel shipping ceremony at the end of November, announced to officially enter the large-scale OLED panel market, and plans to invest 13.1 trillion won (about 70.3 billion yuan) in QD-OLED by 2025.

In addition, since the beginning of this year, the industry and the market have paid a lot of attention to another new display technology, Mini LED, and there are many discussions about the future status of Mini LED and OLED.

In this regard, Liu Yushi believes that although Mini LED backlight and OLED can achieve the same display effect, but the technical characteristics determine that the two are not a substitute for each other. In addition to the market where OLED has obvious advantages such as wear and smartphones, OLED and Mini LED backlight will maintain both competitive and parallel development.