Due to weak demand in the mobile phone market, the decline in prices of mobile phone panels, especially AMOLED panels, has accelerated this year. Under overcapacity pressure, the price decline has exceeded expectations.

According to our survey, some brands actively introduced Ramless DDI flexible AMOLED panels in the second half of last year, trying to narrow the price gap with rigid AMOLED panels and increase usage rates through DDI cost optimization. However, the inventory level of flexible AMOLED panels with Ram is high, and the price decline has also accelerated, while also narrowing the price gap with rigid AMOLED panels.

The current prices update:

• Rigid AMOLED panels are around USD 18-20.
• Flexible AMOLED panels with Ram are priced at around USD 25 or even lower, which is a significant drop from the average of USD 30 or more last year.
• The above price reduction of flexible AMOLED panels with Ram has led to a price reduction of Ramless DDI flexible AMOLED panels, which are currently priced at around USD 20-22.

The significant price reduction of flexible AMOLED panels with Ram has dimmed the cost advantage of Ramless DDI flexible AMOLED panels, and currently only Xiaomi has adopted them. Other first-tier brand customers remain cautious.

In addition, due to the momentum of flexible AMOLED panel price declines, whether the price of rigid AMOLED panels will follow suit has become a challenge for SDC. We believe that SDC should follow the price reduction strategy and may even approach the level of USD 15 in the second half of the year after abandoning the USD 20 threshold.

However, there are two reasons why we believe SDC may find it difficult to reverse the current situation even with a price reduction strategy. These reasons include:

• Weak overall smartphone demand this year.
• Chinese brand customers will gradually adjust their procurement strategy to focus on domestic panel factories. For SDC, how to dispose of rigid AMOLED panel capacity in the medium to long term will be a major issue.

Due to the sustained pressure on AMOLED panel prices, LTPS LCD panel prices are also forced to continue to decline, and it is expected that prices will continue to drop from the current range of USD 10-15 and may even fall below USD 10.

On the other hand, because LTPS LCD prices have approached a-Si LCD panel prices, it has aroused the interest of some brand customers. Under the overall weak market conditions, adopting low-cost LTPS LCD specifications may help improve revenue performance or stimulate demand by upgrading from HD to FHD specifications at the same price.

Industry trend & Price trend

IT panel industry is expected to see a peak season in the second half of the year. Indicators such as channel inventory and brand inventory have improved from the slump last year, and a rebound in demand can be expected in the second half of the year. However, commercial IT panels are being purchased quite cautiously due to high inflation and economic uncertainties, while consumer IT panels can be expected to perform better.

In the display sector, there has been an observed increase in prices for gaming monitors, but it is unlikely to see a large-scale replenishment like in the TV market due to sufficient supply of IT panels and increasing production capacity in China. There is limited room for a significant price increase, but consumer displays may experience a small rebound, unlike commercial displays.

As for TVs, it is expected that the cost of production will surpass cash cost in May and June, leading panel manufacturers to increase their production rates. The extent of this increase will be crucial, as it could potentially drive panel prices higher or stall the price increase altogether. Production increase poses a significant uncertainty for supply and price hikes, with the third quarter remaining a key period that will depend on demand. If China returns to cash levels, higher production rates could be a potential risk.

Utilization rate

According to TrendForce, global panel manufacturers had a production capacity utilization rate of around 67%-68% in the first quarter, which is expected to increase to 73%-74% in the second quarter. The third quarter is conservatively estimated to reach utilization rate of nearly 80%.

China Dominates the LCD Market

As Samsung and LG Display gradually withdraw from the LCD market, Chinese panel manufacturers continue to expand their market share. This year, the global shipment volume for TV panels is expected to reach 70% market share.

According to TrendForce’s latest panel price analysis, due to the low inventory level of panel manufacturers and the strategy of maintaining production regulation, the overall supply and demand of TV panels have reached balance. With the strengthening of the stocking momentum for TV panels in China, the price increase trend of TV panels in April can still continue, but the price difference between first-tier and second-tier brand customers is relatively large.

Second-tier brand customers mostly can only accept the price increase of the panel manufacturers, while first-tier brand customers still have a certain degree of bargaining space. Looking at the TV panel prices in April, all sizes have maintained an upward trend, with 32 inches expected to increase by 1USD, 43 inches by 3USD, 50 inches by 6 USD, 55 inches by 7~8 USD, 65 inches by 13USD, and 75 inches by 10~11 USD. With this price increase trend, TV panel prices may have a chance to return to the cash cost level in May.

After the monitor panel prices stabilized in March, there are currently signs of strengthening demand for some consumer models, including high-end gaming monitors and some entry-level affordable ones. This is partly due to downstream customers replenishing inventory demand, and also preparing for the upcoming 618 promotion in China. Therefore, it is expected that the full-size monitor panel prices in April will remain stable.

Turning to notebook panel, Chromebook demand has rebounded in Q2, but other mainstream models are still affected by brand customers’ inventory destocking, leading to no clear increase yet. Therefore, notebook panel prices in April are expected to remain stable, with potential for increase depending on the timing of inventory destocking and demand momentum.

The latest study by TrendForce shows that demand for large-size and mobile driver ICs will steadily grow as various applications recover. However, the speed of capacity supply adjustment and competition among different technologies will remain the key focus in the next few quarters.

Another thing worth noting is that the US chip ban has led to a trend of independent development between Chinese and non-Chinese supply chains. While this may increase production time and cost, it also presents opportunities for individual Chinese domestic suppliers and Taiwanese wafer foundries to acquire fresh orders.

Observations by TrendForce on each sector of driver ICs are summarized below-

• Large-size panel driver ICs: demand is expected to recover gradually and stabilize prices, but suppliers are cautious about inventory, which could lead to a supply shortage if demand surges too quickly.
• TDDI for mobile devices: prices and inventory have reached a low point, with a small rebound expected. In the long run, AMOLED panels are expected to dominate, so IC suppliers will need to explore new applications for medium-sized panels.
• AMOLED driver ICs: UMC’s 28nm high-voltage process is producing AMOLED driver ICs. If Apple shifts all 40nm AMOLED driver IC production to 28nm, TSMC’s 28nm capacity availability will be crucial to the market’s supply-demand balance.
• RAM-Less AMOLED driver ICs: RAM-Less AMOLED driver ICs with Chinese flexible AMOLED panels are gradually taking shape due to China’s domestic policy. However, the rapid price drop of Full-Ram AMOLED has caused brands to hesitate on adopting Ram-Less AMOLED.

TrendForce’s latest report, “AMOLED Technology and Market Status”, reveals that OLED, the next generation of digital displays, has not only taken hold of the smartphone market but is also beginning to make its move into other applications. Organic OLED materials are the core of the industry supply chain, accounting for 23% of the cost of making smartphone panels. An increasing penetration rate has allowed the global value of OLED materials to be estimated at US$2.23 billion in 2022, with a YoY growth rate of 30%. Production values are expected to reach US$3 billion by 2025, owing to the support of manufacturers.

OLED light-emitting components are either based on polymers or small-molecule materials. Polymers have poor solubility in organic solvents, which results in impure color and poor film uniformity. However, when combined with printing technology, the high aperture ratio can fit more materials and compensate for the poor lifespan and efficiency of polymers. Small-molecule materials have purer color and exhibit higher brightness, which can be applied to larger-generation OLED production. However, they are currently limited to developing FMM and vapor deposition machines.

OLED production begins with synthesizing intermediates from raw monomers. Then, the intermediates are processed to become precursors before finally being sublimated and purified into terminal OLED materials. When raw monomers are synthesized chemically into intermediates, there’s a gross margin of about 10–20%. These are mainly supplied by Chinese manufacturing companies such as Jilin OLED Material, Ruilian New Materials, Aglaia Tech, and Shenzhen Mason. Terminal materials are produced via sublimation and purification and their structure will not change through subsequent production. Therefore, the chemical structure, processes, and formulas are essential to trade secrets for terminal material manufacturers. The purity of these materials after sublimation is expected to be very high, meaning that technological barriers are also very high, allowing for gross margins as high as 60–70%. The technology and patents are concentrated within a few foreign manufacturers. However, the booming market has led to an influx of upstream manufacturers, gradually breaking down past technological barriers. Some Chinese manufacturers have been able to achieve mass production of precursors and terminal materials, and are now actively competing in the supply chain and driving growth.

Apart from two electrodes, the structure of an OLED component consists of organic light-emitting materials, including the main host (light-emitting layer), guest material (dopant), and functional layers (with electron or hole transport properties). DuPont and LG Chemical are the major manufacturers of red OLEDs, while Samsung DSI and Merck mostly produce green OLEDs. UDC has a monopoly on red and green phosphorescent dopant materials due to patent barriers. Blue light-emitting materials used to be primarily supplied by Idemitsu Kosan and Merck. Recently, LG’s next generation OLED evo TV uses deuterium-based blue emitter materials—supplied by DuPont and LG Chemical—to improve blue light-emitting efficiency. Its precursors are supplied by Ruilian New Materials.

Besides established manufacturers like Tokuyama, Idemitsu Kosan, and LG, Chinese manufacturers are also beginning to enter into the market to supply functional layers, such as Laite’s Red Prime. Samsung and UDC are planning to commercialize blue phosphorescent materials in 2024 in order to address the lifetime issues of blue OLEDs. Many new technologies, such as South Korean materials manufacturer, Lordin’s, patented Zero Radius Intra-Molecular Energy Transfer (ZRIET) rely on the efficiency of energy transfer between the main host and dopant, which is highly dependent on the distance between them. When that distance approaches zero, the quantum efficiencies of the molecules will not be affected at all. Therefore, efficiency can be improved by controlling the speed of energy transfer between the internal molecules of the material. Lordin has synthesized a material that maintains the respective characteristics of the main and dopant materials as well as a high energy transfer rate, which is expected to produce OLEDs that will be four times more efficient.

TrendForce believes the next stage of mobile terminal products will shift from folding smartphones to smart wearables, IT, and automotive applications, which will place more stringent demand on OLED components. The layout of panel manufacturers is becoming clearer thanks to brand endorsements. LG, Samsung, and BOE are all aggressively competing for priority for the Tokki G8.7 evaporation machine to gain an advantage in expanding application. The accelerated commercialization of blue phosphorescent materials and more innovative technologies, such as Samsung’s vertical evaporation developed with ULVAC, eLeap lithography, and printing processes to improve the aperture ratio will help push the expansion of OLEDs in the display industry. Meanwhile, costs will become more competitive as more Chinese manufacturers enter the market.