On February 28th, as per the ams OSRAM’s press release, it has announced the unexpected cancellation of its Micro LED key project. The company will reevaluate its related strategies and provide initial estimates of the impact on its mid-term operations.

As ams OSRAM announced the unexpected cancellation of its key Micro LED project, it has prompted the company to reevaluate its Micro LED development strategy, as per TechNews’ report, speculation has arisen regarding the collaboration with Apple to introduce Micro LED technology into the Apple Watch Ultra 3. The cancellation may signify the end of this collaboration.

The first Apple Watch featuring a Micro LED display was originally scheduled for release in 2026, with rumors suggesting a potential delay to 2027 or later due to high costs. However, ams Osram’s recent announcement to cancel the Micro LED project undoubtedly sends shockwaves through the industry, casting a shadow over the integration of Micro LED technology into watches or other devices.

Unexpected Cancellation of the Micro LED Project

The ams OSRAM’s press release indicates that the management board of ams OSRAM has been informed of the unexpected cancellation of its Micro LED key project. Consequently, it has decided to re-assess its Micro LED development strategy, especially concerning the 8-inch LED fab in Kulim, Malaysia.

Upon preliminary estimation, ams OSRAM anticipates recording non-cash impairment losses of EUR 600 to 900 million related to Micro LED assets and goodwill in the first quarter of 2024. Currently, ams OSRAM is engaged in discussions with relevant clients.

This implies the changes to the capitalization of ams OSRAM’s investment into Micro LED R&D and the reduced subsidies from public funding schemes. These changes will impact ams OSRAM’s operational profitability (adjusted EBIT) for the fiscal year 2024, with estimated effects ranging from EUR 30 to 50 million.

In the information disclosed, ams OSRAM did not provide detailed specifics about the Micro LED project. Further information will be closely monitored by the industry. From the perspective of the Micro LED industry, there are still technological bottlenecks to overcome, such as chip efficiency, yield rates in mass transfer, achieving full colorization, and the immaturity of supporting industries. Cost reduction has yet to be effectively achieved, which may be one of the reasons for the project’s cancellation.

Micro LED Watch Project Not Necessarily Cancelled, Opportunities for Taiwanese and Korean Manufacturers?

Nevertheless, Apple has not abandoned discussions with other chip manufacturers, implying that the Micro LED watch project may continue. Taiwan and South Korea still maintain corresponding supply chains to support this, with downstream operations involving LG Display (LGD) in backplane and module production.

TrendForce points out that Ennostar has past experience collaborating with Apple, and PlayNitride is also a leading global Micro LED manufacturer. Furthermore, PlayNitride is part of the AU Optronics Group and can provide Micro LED watch chips and backplane transfer technology.

However, for now, the termination of the collaboration between Apple and ams Osram may also prompt other manufacturers to consider the risks of engaging in new partnerships with Apple. Apart from the initial substantial investment required, once the collaboration begins, Apple will actively seek out second suppliers, which are all aspects that need careful consideration.

From the current Micro LED supply chain outlook, TrendForce indicates that Micro LED has four main applications: large displays, wearables, automotive, and near-eye displays.

Samsung leads in large displays, and there is significant market anticipation for Micro LED smartwatches. AU Optronics continues to focus on Micro LED watches, but with a lack of synchronous brand influence, overall interest and development willingness from manufacturers may decrease compared to other brands.

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• [New] The Reality of Micro LED Unveiled – Infinite Opportunities, Yet Initial Capacity Demand Remains Low

(Photo credit: ams OSRAM)

TrendForce will host the “LED Forum 2023” on September 5th at the National Taiwan University Hospital International Conference Center. The event will showcase presentations from TrendForce’s Senior Research Vice President, Eric Chiou, and representatives from various companies and institutes, including Mojo Vision, ITRI, Lumus, and others. Majorly focus on the advancements in Micro LED technology and its applications.

This event will host the Micro LED Forum on September 5th. The forum will cover key topics including Metaverse trends, Micro LED technology advancements and innovative applications. Industry experts will share market insights, company progress updates, and notable technological breakthroughs in 2023.

【Information】

• Date: September 5^th, 2023
• Time: 09:30~17:00（Registration starts at 8:45）
• Location: Room 401, NTUH International Convention Center
• Website：https://seminar.trendforce.com/LEDforum/2023/TW/index/

The demand situation of the global car market deteriorated in 2022 due to the impacts of the Russia-Ukraine military conflict and the ongoing COVID-19 outbreaks across China. However, the demand for automotive lighting products during the same year was propped up by two developments. First, the penetration rate of LED headlights (headlamps) rose further. Second, there were significant advances in technologies related to smart headlights, marker lights (lamps), and smart ambient lights.

Furthermore, costs surged for plastics during 2022, so suppliers for automotive lighting products had the opportunity to keep their prices steady or raise them. Hence, TrendForce estimates that the value of the global market for automotive lighting products has come to US$32.68 billion for 2022, reflecting a YoY growth of 4%.

Looking ahead, development trends in the automotive lighting market include personalized products, communication displays, solutions for ADAS, and improvements related to safety functions. TrendForce currently forecasts that the market value will scale up to US$34.314 billion for 2023, showing a YoY growth of 5%.

In addition to improvements in adaptive headlights and tail lights (lamps), TrendForce points to several other product categories that have gained greater importance and captured the attention of carmakers, automotive lighting suppliers, LED suppliers, and drive IC suppliers. Examples include marker lights, (smart) ambient lights, and solutions for light-signaling projection. The aforementioned market participants have been proactively developing offerings under these categories. Going forward, carmakers will continue to bring surprising and innovative ideas to the development of automotive lighting. This, in conjunction with the promotion of ADAS and automotive driving technologies, will create limitless market potential for automotive lighting suppliers.

According to TrendForce’s “Global LED Industry Data Base and LED Player Movement Quarterly Update” report, demand for high-standard LED products in the lighting market will enter a growth stage. Generally speaking, the price of lighting LED products is stable. However, due to the recent rise in global raw material prices, the unit price of products looks to trend higher. Coupled with high demand for energy conservation from governments around the world, the output value of the lighting LED market in 2022 is forecast to have an opportunity to reach US$8.11 billion, or 9.2% growth YoY. In the next few years, the scale of the lighting LED market will continue growing due to the promotion of human centric lighting (HCL), smart lighting, and other factors and is expected to reach US$11.1 billion by 2026, with a compound annual growth rate (CAGR) of 8.4% from 2021 to 2026.

TrendForce further states, despite the continuing impact of the pandemic in 2022, the pervasiveness of vaccines and the recovery of economic activities coupled with the rigid demand associated with the lighting market as a daily necessity, global “carbon neutrality,” and the growing requirements of the energy conservation agenda, have moved numerous major powers to realize net-zero emissions through measures such as energy efficiency and low-carbon heating in recent years. However, lighting is a leading energy consumer in buildings, accounting for 20% to 30% of total building energy consumption. LED penetration will deepen, driven by the high demand for energy conservation and policies and regulations requiring the upgrade of aging equipment. In addition, smart lighting can also achieve the purpose of timely energy conservation. Therefore, there is strong demand for the introduction of LED lighting and smart lighting upgrades in commercial lighting, residential lighting, outdoor lighting, and industrial lighting, which further drives demand for high-standard LED products including high light efficiency, high color rendering and color saturation, low blue light HCL and smart lighting devices.

The gradual recovery of the lighting market is clearly reflected in the 2021 manufacturer revenue rankings. Lighting LED manufacturers including Samsung LED, ams OSRAM, CREE LED, Lumileds, Seoul Semiconductor, MLS, and Lightning have all posted revenue growth. MLS is still the leading manufacturer of lighting LEDs, ranking first in revenue, with an annual revenue growth rate of 34% in 2021. ams OSRAM, Lumileds, CREE LED, and Samsung LED primarily took advantage of orders for industrial, outdoor, and horticultural lighting last year, posting annual revenue growth of 26%, 18%, and 8%, respectively.

In terms of pricing, as demand in the lighting industry gradually recovered in 2021, facing demand for higher specification terminal application products and the impact of rising overall costs in raw materials and operations, LED packaging factories no longer adopted pricing strategies to capture additional market share, allowing lighting LED product pricing to stabilize and rebound in 2021. In terms of product categories, the average market price of medium and low-power lighting LED products (less than 1 watt, excluding 1 watt) such as 2835 LED, 3030 LED, and 5630 LED, posted an annual growth rate of 2.1~4.4%. For high-power lighting LED products (above 1 watt) such as ceramic substrate LEDs and 7070 LEDs, average annual market price growth was as much as 3.0~6.0%. TrendForce expects lighting LED pricing to further stabilize in 1H22.

During Apple’s Spring Loaded event, the Cupertino company announced the upcoming release of its latest 12.9-inch iPad Pro models featuring Mini LED display technology. According to TrendForce’s latest investigations, demand for the 12.9-inch iPad Pro has already been relatively high in the niche markets.

Thus, given the thorough improvement in specs as well as the very slight price hike of merely $100 over the previous generation, TrendForce is not only revising up its shipment forecast for the 2021 version of the 12-inch iPad Pro from four million units to five million units this year, but also expecting this product to account for a 3.1% share in the global tablet market, compared to the previous forecast of 2.5%.

TrendForce analyst Max Chen indicates three key areas of observation with respect to Apple’s latest flagship tablet: technology cost, retail price, and product spec. First, in terms of technology cost, the Mini LED backlight used in the new 12.9-inch iPad Pro costs about US$85 more than the traditional edge-lit LED backlight used in the previous generation.

Second, in terms of retail price, the entry-level 128GB model of the 12.9-inch Mini LED iPad Pro retails for $1,099, which is only $100 higher than the equivalent model of the previous generation. As such, the price hike in the latest model is, for the most part, a result of the increased cost of Mini LED backlights, rather than wholly being an attempt at driving up profit margins. The modest price hike is therefore an indication of Apple’s desire to become the gold standard in the tablet market by adopting Mini LED backlight technology.

Finally, in terms of product spec, the latest 12.9-inch Mini LED iPad Pro is equipped with Apple’s high-end Liquid Retina XDR technology, which gives the tablet a max full-screen brightness of 1,000 nits, peak brightness of 1,600 nits, and contrast ratio of 1,000,000:1, with the peak brightness and contrast ratio both being firsts in the tablet industry.

Furthermore, it should be pointed out that the latest tablet is equipped with 10,384 Mini LED chips, divided into 2,596 dimming zones, giving it additional high contrast and high color saturation performance that is superior to the 31.5-inch iMac, which features 512 backlight dimming zones and is the first product to feature Apple’s XDR display technology.

With regards to Apple’s plans for 2H21, the 14-inch and 16-inch MacBook models will likewise feature Mini LED backlight technology, which will become the hardware benchmark for high-end tablets and notebook computers. The release of Apple’s Mini LED-equipped tablets is expected to galvanize a growth against market headwinds for upstream and downstream companies in the Mini LED supply chain, including Mini LED chip suppliers (e.g., Ennostar), testing and sorting service suppliers (e.g., FitTech, Saultech, and YTEC), SMT suppliers (e.g., TSMT and Yenrich), backplane PCB suppliers (e.g., Zhen Ding Tech and Tripod Technology), driver IC suppliers (e.g., Parade, Novatek, and Macroblock), and light source module suppliers (e.g., Radiant/ROE and GIS).

(Cover image source: Apple.com)

For more information on reports and market data from TrendForce’s Department of Optoelectronics Research, please click here, or email Ms. Grace Li from the Sales Department at graceli@trendforce.com