According to TechNews, AUO held a board meeting and signed a contract with PlayNitride on October 31st. The deal entails PlayNitride assisting AUO in setting up a cutting-edge 6-inch Micro LED Chip on Carrier (CoC) production line at AUO’s Longtan Tech Park facility, offering an all-in-one solution. The contract is valued at a substantial 700 million NT dollars, with a duration of 30 months.

The CoC production line is a pivotal part of Micro LED manufacturing, and AUO emphasizes that this contract is distinct from the one they have with Ennostar.

AUO highlights that their partnership with PlayNitride in establishing the CoC production line not only puts them in control of the most vital raw materials for Micro LED but also enables them to bring CoC to Micro LED module production in-house. This strategic move is expected to significantly enhance production efficiency, increase yield rates, and bolster AUO’s competitiveness in terms of Micro LED product costs. This, in turn, accelerates the timeline for the mass commercialization of Micro LED.

AUO’s involvement in Micro LED research dates back to 2012, resulting in expertise in display technology and manufacturing processes. In the display industry, they’ve been integrating the supply chain and establishing a comprehensive Micro LED ecosystem, gradually working toward the goal of commercialization during the year of mass production for Micro LED. AUO has big plans for applying Micro LED display technology across various fields.

Addressing concerns about technology transfer, PlayNitride clarifies that technology transfer primarily pertains to well-established product technologies, carried out incrementally with different firms. At the same time, PlayNitride is committed to developing new processes and products, and with patent protection in place and specific company considerations, there’s currently no need to fret about any technology leakage.
In August this year, TrendForce predicted rapid growth in the Micro LED chip market, with an expected value of $27 million in 2023, marking a 92% YoY increase. This growth is expected to continue, reaching approximately $580 million in 2027, with a CAGR of about 136% from 2022 to 2027. AUO, known for LCDs, has already produced the world’s first 1.39-inch Micro LED watch panel. Major companies, including AUO’s current client Tag Heuer, are potential adopters of Micro LED wearable devices.
(Image: AUO)

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• Japanese Watchmakers and Western Automakers Boost Micro LED Market to Near US$600 Million by 2027, Says TrendForce

Apple’s plan to release the first Apple Watch with a Micro LED display in 2024 has reportedly been delayed until the second half of 2025 or later due to production challenges. However, this delay shows Apple’s cautious approach to technology and evaluation. This delay shows Apple’s prudence and assessment of technology, but it also brings new opportunities for Ennostar, which was previously considered only a second supplier

According to market research firm DSCC’s, the new Apple Watch will initially adopt Osram’s Micro LED chips, and Epistar(under Ennostar), will be responsible for shipping related components. However, some insiders have revealed that Osram’s technology produces Vertical Chips, which are different from Epistar’s technology and are unlikely to be used in the same project simultaneously.

Epistar’s current chip technology is Flip Chips, Ennostar has stated that American brands are currently collaborating with European suppliers, and Epistar “may have a chance” to be the second supplier, however, ‘the second supplier” may not have a chance to join the cast until 2026.

DSCC mentioned that Epistar is responsible for shipping related components, which differs from what Ennostar said “second supplier”. Technically speaking, Ennostar is more likely to be a “parallel competitor” to Osram since the process of Vertical Chips versus Flip Chips are not on the same technical base. From this perspective, obviously, Apple has dual strategies on Micro LED from adopting Osram’s Vertical Chips as the core and maintaining the technical connections with Taiwanese manufacturers at the same time, which Ennostar may have a shot to ramp up to the main supplier again to take off the “second source” label.

Does the Micro LED process hint at Apple’s product line planning?

Micro LED chips now are mainly categorized into Vertical, Lateral, and Flip chips. According to industry insiders, Osram began developing Micro LED in 2019 but only focused on vertical chips due to patent issues. Currently, only 3 companies in the world have patents for Vertical Chips, and Osram is likely to gain a competitive advantage in Micro LED through these patents. As a result, the company is targeting the development of watches, phones, and AR glasses, and has been collaborating with Apple on watch projects in Germany since 2019. The size of the watch chip produced in collaboration with Apple is approximately 8um.

Meanwhile, Osram announced in 2021 that it is expanding its LED factory in Kulim, Malaysia with an investment of approximately $850 million, and plans to produce Mini LED and Micro LED chips in its 8-inch factory, with mass production expected in 2024. The company also mentioned last year that it plans to produce small-sized products by 2024, and this small-sized product is very likely to be Apple’s Apple Watch.

As for companies such as PlayNitride, Epistar, and Chinese manufacturers that are working on Micro LED technology, they are all using flip chips. PlayNitride stated that they have the opportunity to produce Lateral Chips as client’s request, and Vertical Chips may be produced for AR and VR in the future. “It still depends on the customer’s application to determine what kind of chips matches their products, e.g. Vertical Chips can bring higher PPI with a smaller size of chips.” PlayNitirde said.

Due to differences in the position of electrodes among Vertical chips, Lateral chips, and Flip Chips, give their own pros and cons in each production process. The advantage of Vertical Chips is that they can be made smaller, and the yield rate is higher as the size gets smaller. However, it is difficult to test and repair them once all the Micro LEDs are arranged and connected for testing, so the yield rate may decrease during the bonding process.

Vertical Chips are now suitable for use in the fields of watches, smartphones, and AR glasses, while Lateral Chips are used for other applications like automotive or large displays. However, AUO plans to produce Micro LED watches using Flip Chips, showing that different technologies can still be applied to similar products. In the future, using Vertical Chips may be necessary for developing AR glasses, which may explain why Apple is using this technology in its Apple Watch.

With the dawn of the era of Micro LED mass production, what will be Apple’s strategy?

Apple’s influence in display technology development affects other brands’ adoption attitudes. To reduce risks, Apple is not taking sides as different technologies and processes are involved, which may pose challenges to transfer technology or backplane technology, affecting the entire Micro LED supply chain. For the next generation Apple Watch, Apple is mainly working with Osram for Vertical MicroLED Chips, but may also collaborate with Taiwanese companies on Lateral or Flip Chips in the future.（Image credit: TechNews）