Display Sector Report / Display
August 16, 2011
Large AMOLED gets a cost edge over LCD
Overweight (Maintain) Company
Rating TP (KRW)
Cheil Ind. (001300)
BUY
140,000
Duksan Hi-Metal(077360)
BUY
37,000
SFA Engineering (056190)
BUY
80,000
BUY
98,000
ICD (040910) AP Systems (054620)
Not rated
Advanced Nano Products (121600)
BUY
NA 25,000
Contents 1. Display capex fast shifts from LCD to AMOLED .....................................................1 2. Large AMOLED manufacturing costs by technology ..................................................3 3. Material and equipment makers have the most investment appeal ...........................6
Large AMOLED to start pilot production in 2012 and enter mass production stage in 2013 Samsung Mobile Display (SMD) and LG Display (LGD) should dip their toes in the large AMOLED waters in 2012. Both SMD and LGD are working on 8G AMOLED pilot lines, which should be ready for test runs in 2012. We expect the large-size AMOLED camp to be split between SMD’s p-Si based TFT substrates and LGD’s a-Si based oxide TFT substrates. SMD should outperform LGD in terms of substrate functionality but LGD should deliver greater cost savings than its rival. Samsung Electronics (Samsung) is reportedly developing oxide TFT technologies but the type of technology, investment scale, or production timing remains uncertain. Given the early mover’s advantage in the TV market, we expect the mass production of large AMOLED panels to start from 2013 or 2014 at the latest.
LCD capex reduction but ongoing AMOLED capex As the recovery of the LCD market has been delayed, LCD panel makers are rapidly scaling back capex. The global top four LCD players slashed their 2011F capex by 30%-50% compared to initial plans (35% YoY). Investments, however, remain intact in AMOLED and high-end LCD panels. SMD should go ahead with 5.5G capex and AMOLED pilot lines, while LGD is gearing up to pilot-run large AMOLED panel lines and Taiwanese panel makers are shifting to oxide TFT lines.
Cost-competitive oxide TFT to lead large AMOLED
82-2-3276-6235 mskang@truefriend.com
As large panels are more cost-sensitive than small to mid segments, the large AMOLED panel market is likely to adopt a-Si based oxide TFT technology, not LTPS technology, to gain cost competitiveness. Oxide TFT technology allows panel makers to diversify product mix because it is widely applicable from AMOLED to glass-free 3D LCD panels and ultradefinition LCD panels. LTPS technology should improve and be commercially viable over the long term. But we believe oxide TFT will lead the development of large AMOLED because it reduces initial capex requirements.
Matthew Yang
Beneficiaries of large AMOLED
82-2-3276-6174 matthew.yang@truefriend.com
The TV display market is worth 10 times more than the mobile display market in terms of area surface. As such, if equipment or material vendors can extend their market reach beyond the small to midsize to large AMOLEDs, we believe they deserve high valuation. Our top-picks are Cheil Ind and Duksan Hi-Metal, steadfast materials suppliers, and SFA and ICD whose equipment can be used on large-size panel lines.
Jay Yoo, CFA 82-2-3276-6178 jongwoo.yoo@truefriend.com
Moon Sung Kang
Heuiseok Jeong 82-2-3276-6277 heuiseok.j@truefriend.com