The price difference between OLED hard screens and LTPS LCD is getting smaller and the capacity utilization rate of hard screen OLED factories continues to rise
In the latest second quarter LCD for Samsung Shipment and Fab Utilization report released by DSCC, we saw a significant rebound in Samsung’s capacity utilization rate from various mobile phone brands such as Apple, Samsung Electronics and other mobile phones in China in the second half of the year. Demand for new machines such as brands.
As shown in Figure 1, the capacity utilization rate of Samsung’s hard screens is expected to recover to 80% in June, mainly in the A2 plant, with monthly substrate input capacity of 175k. The glass input of the A2 plant has increased from 2. The monthly lowest point began to gradually increase, mainly from the demand brought about by the price reduction of hard-screen OLED. The average selling price of OLED hard screens between 5.5”-6” is expected to drop to USD 23 in the third quarter, and the price difference between corresponding LTPS LCD screens is only around USD 5, even in the Chinese market in the second quarter. This price has already appeared. Since the price of OLED mobile phones is relatively higher than that of LTPS LCD screen mobile phones, which means that the use of OLED hard screens will bring more profit to mobile phone manufacturers. Therefore, we believe that the capacity utilization rate of hard screen OLED factories will continue to rise in the second half of the year.
Figure 1: SDC's OLED Fab Utilization
Source: DSCC'sQuarterly OLED Shipment and Fab Utilization Report
In the short term, Panel makers including Samsung may be more willing to increase the production capacity of hard-screen OLEDs. Although the capacity utilization rate of flexible-screen LCD for Samsung factories is also rebounding, compared with the capacity utilization rate of hard-screen OLEDs, the capacity utilization rate of flexible OLEDs has declined very rapidly, which was only 31% in April, and it recovered in May. The rebound to 37% was due to the beginning of stocking for 5.85' Apple screens. The flexible OLED capacity utilization rate increased to 52% in June mainly for the stocking of the new 6.46' iPhone X Plus. We believe that the capacity utilization rate of both hard screen and flexible screen OLED will improve a lot in the second half of the year, and it will also bring benefits to material manufacturers and laser manufacturers, such as UDC and Coherent.
An important question is, as happened in the first and second quarters of this year, how will Samsung plan the spare capacity for Apple in the first quarter of 2019. Continue to narrow the price difference between hard-screen OLED and LTPS LCD, as well as plans for more flexible shapes such as foldable and bendable shapes will help consume idle capacity, and the growth of OLED penetration will also help in the off-season.
From Figure 2, we can see that SDC’s revenue in the second quarter fell by 16% compared to the first quarter and reached a bottom, but compared with the same period last year, it increased slightly by 2% to 4.4 billion. US dollars. It should be noted that since the module factory is in Vietnam, it basically takes two months from the input of glass substrates to the recognition of revenue. Therefore, the revenue generated by the increase in demand brought about by the increase in capacity utilization shown in May and June will be fed back into the third quarter figures. We expect that in the third quarter of this year, SDC OLED's revenue will increase by 52% quarterly, compared with a 35% increase in the same period last year, reaching a scale of 6.7 billion U.S. dollars. In the fourth quarter, compared to the third quarter, it is expected to continue to grow by 6% to reach 7.1 billion US dollars, but compared to the fourth quarter of 2017, it is expected to fall by 11%, due to the high price of SDC flexible OLED in the fourth quarter of last year In 2018 as a whole, we can see that SDC OLED's revenue growth rate is 11% to 23.4 billion US dollars. Compared with the challenges faced in early 2018, they have achieved good revenue results.
Figure 2: SDC’s LCD for Samsung Revenue Forecast
Source: DSCC’sQuarterly OLED Shipment and Fab Utilization Report
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