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iSuppli: OLED panel shortage a concern for Android smartphone makers

iSuppli: OLED panel shortage a concern for Android smartphone makers
Thomas Ricker
Thomas Ricker|@trixxy|July 8, 2010 5:46 AM
Everyone wants an OLED display on their cellphone, right? Ok, maybe not everybody, especially when compared to regular AMOLED, but we certainly want, no demand, a 4-plus inch Super AMOLED on our next Android smartphone. Problem is, there just aren't enough to go around according to iSuppli. An issue compounded by the fact that Samsung, the world's largest AMOLED panel manufacturer, gets first crack at its displays in support of its massive growth plans for 2010, leaving companies like HTC to look elsewhere as we've already heard. That leaves LG, the only other source for small AMOLED panels, to shoulder the burden until the two can ramp up production, or until more players can enter the market. Samsung hopes to significantly boost production in 2012 when it brings a new $2.2 billion AMOLED facility on-line. Meanwhile, Taiwan-based AU Optronics and TPO Display Corp. plan to introduce AMOLED products by the end of 2010 or early 2011. Until then there's always the venerable LCD which will continue to dwarf AMOLED shipments for many years to come. See the numbers after the break.
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OLED Shortages Cause Concerns in Android Smart Phone Market

El Segundo, Calif., July 7, 2010-Short supplies of small-sized Active
Matrix Organic Light Emitting Diode (AMOLED) displays, used most
notably in Android smart phones, are slowing the display technology's
bid to challenge the dominance of the incumbent AMLCD technology in
the smart phone market, according to iSuppli Corp.

Shipments of small-sized AMOLEDs used in cell phones and other
applications are projected to reach 184.5 million units by 2014, up
from 20.4 million units in 2009, for a Compound Annual Growth Rate
(CAGR) of 55.1 percent during the period, according to a revised
forecast from iSuppli. While such growth is impressive, the AMOLED
shipments pale next to small-sized AMLCDs, which are forecasted to
rise to 1.75 billion units by 2014 from 1.3 billion in 2009.

The attached figure presents iSuppli's forecasts for both small-sized
AMLCDs and AMOLEDs from 2009 to 2014. iSuppli defines small-sized
displays as those having a diagonal dimension of 9-inches and smaller.

"Starting with the Nexus One introduced in January, Android-based
smart phones have aggressively adopted high-quality AMOLED displays as
a competitive differentiator against the advanced-technology AMLCD
screen used in the iPhone," said Vinita Jakhanwal, principal analyst
for small and medium displays at iSuppli. "However, rising
demand-combined with a limited supply base-has led to the constrained
availability of AMOLEDs."

AMOLEDs offer a number of advantages compared to AMLCDs.

First, AMOLEDs use no backlights, so they offer potential
power-savings benefits compared to AMLCDs-a particular advantage in
battery-powered smart phones. Second, the elimination of backlights
also makes AMOLEDs very thin relative to AMLCDs. Finally AMLCDs also
offer superior performance, with better fast motion display and a
richer color gamut compared to AMOLEDs.

Sole-supplier issues

At present, Samsung Mobile Displays (SMD) and LG Displays represent
the only sources for AMOLED panels.

SMD is investing $2.2 billion in its AMOLED facility by 2012 to ramp
up production, while shipments now are limited at LG as the company
has yet to increase production. In addition to the South Korean
players, Taiwan-based AU Optronics Corp. and TPO Display Corp. are
planning to introduce AMOLED products at the end of 2010 or early
2011, but both companies are not shipping any significant quantities
at this time.

Given the small pool of available AMOLED suppliers, manufacturers of
volume applications such as mobile handsets understandably are
concerned about the potential for disruptions in production if a part
or component becomes delayed or ceases entirely. This is especially
true with a company like Samsung, which has special relationships with
its own internal brand, giving it preferential treatment over outside

If the demand for AMOLEDs is so strong, why aren't other manufacturers
building production facilities and starting production more rapidly?

First, AMOLED is a newer technology compared to the well-established
AMLCD, whose fabs are mature and mostly depreciated in full. This
currently gives AMLCD fixed-cost advantages compared to AMOLED fabs
that have been around only for the last few years. Second, newer
technology means that establishing manufacturing processes could be
prone to yield losses, leading to slower production ramp-ups. Third,
with AMLCD improving its performance and simultaneously exerting
pressure on display prices, competing with the moving performance

as well as price target of LCDs not only is challenging for a new
technology like AMOLED but also delays return on large investments.

Korean initiatives in play

With Samsung and LG spearheading the development of AMOLED, what the
two companies do will determine whether the technology moves beyond
its current niche status into a position in which the technology
becomes a viable competitor for mobile handset displays.

To increase supply, Samsung is heavily investing in AMOLED and plans
to have an additional Gen 5.5 fab up and running at the end of 2011.
For its part, LG is starting a new Gen 4.5 fab that will manufacture
both LTPS and AMOLED panels.

Overall, handset makers are pushing to make displays available in
mass-volume production from AMOLED suppliers. In a market that is
becoming highly competitive with a perceptible emphasis on distinctive
features and improved performance, AMOLED may offer manufacturers
crucial and much needed choices with which they can achieve product

Learn more about the mobile display panel market with Jakhanwal's new
report, entitled: Seasonal Slowdown Impacts Mobile Display Shipments
in Q4 2009.