Growth or Stagnation? - Opportunities & Challenges in Display Industry Jongchan Yoo Vice President Displaybank Co. Ltd., andy@displaybank.com URL : www.displaybank.com
Opportunities & Challenges Opportunities & Challenges CHALLENGES Oversupply Economic Crisis Component Shortage OPPORTUNITIES Display Industry FPTV LCD Monitor LED LCD TV 3D TV Emerging Market Smart Phone Digital Broadcasting Mini Note e-reader AMOLED Smart TV Flexible 2
Contents Opportunities & Challenges in Display Industry Challenges External Impact : Undermined Economy Unbalance of Supply & Demand Over-Investment of TFT LCD Shortage in Key Component Opportunities Strong Demand for LED LCD TV 3D, New Criterion of Display Various Personal Mobile Application AMOLED, as post-tft LCD?
Challenges Challenges External Impact : Undermined Economy Unbalance of Supply & Demand Over-Investment of TFT LCD Shortage in Key Component 4
External Impact : Undermined Economy Undermined Economy KRW/US$ Trend A survey taken in the last week of August by the polling firm StrategyOne suggests that fence sitting by home buyers will dramatically increase in the fourth quarter. Some 87 percent of consumers say they do not plan to make a big-ticket purchase (such as a house or car) in the next 3 to 4 months. Nearly half, 49 percent, say they have already delayed making a big-ticket purchase during the past few months. Only 13 percent said they plan to make a big purchase during the balance of the year. As they brace for a second downturn, Americans are cutting their spending and preparing for an extended financial siege. Just 5 percent think there will be a full economic recovery by the end of this year, and only another 21 percent see recovery taking place by the end of 2011. Half of all Americans polled (50 percent) see a recovery not coming until sometime after the end of 2011, and about a quarter (23 percent) doubt our economy will ever fully recover. Almost two in three Americans (65 percent) say a double-dip recession -- defined as a recession followed by a short-lived recovery, followed by another recession -- is now likely to happen. Among those who expect a double-dip recession, nearly half (44 percent) fear it will be worse than the first one, with 21 percent worried it will be "much more severe." Just 24 percent think the second recession will be less severe. As far as their personal finances, only one of four Americans expects to recover by the end of the year. Nearly half, 46 percent, don't expect to recover until the end of 2011 or later; 26 percent say they will never recover financially. "The American public -- characteristically optimistic and resilient -- is looking around and seeing more and more dark storm clouds approaching on the horizon," said Bradley Honan, senior vice president of StrategyOne. "Not only has confidence in the economy been severely undermined, there are now real, significant doubts emerging about our country." (Source : UPI, 9th Sep 2010, quotation from StrategyOne survey) (Source : KEB, Sep 2010) 5
LCD Panel Over Supply Over Supply Worldwide TFT LCD Panel Demand & Supply Over Supply 0 ~ 8% Balance Q1'09 Q1'10 Q1'11 Q1'12 Q1'13 Q1'14 Demand Supply Glut (Source : Large Area TFT-LCD Panel Supply & Demand Analysis, Displaybank, Jun. 2010) 6
Glut effected to Price and Profit Over Supply Panel Price (US$) Glut Ratio(%) OPM(%) Q1'04 Q1'05 Q1'06 Q1'07 Q1'08 Q1'09 Q1'10 * OPM (Operating Profit Margin) : Sum of SEC, LGD, AUO, CMO and Sharp (Source : Large Area TFT-LCD Panel Supply & Demand Analysis, Displaybank, Jun. 2010) 7
Over Investment to China Over Investment Korea 2010 2011 2012 2013 LGD - Gen8 (120K) SEC- Gen8 (70+30K) LGD- Gen8 (60+30K) Taiwan CMI - Gen8 (30K) AUO- Gen8 (50+30K) Japan China Supply Capacity Trend IPS - Gen8 (45K) BOE- Gen6 (90K) BOE- Gen8 (90K) CEC- Gen6 (60+20K) LongFei- Gen8 (90K) TCL - Gen8 (60K) SEC - Gen7.5 (100K) CEC - Gen8 (90K) AUO - Gen7.5 (90K) Operating or under construction Decided the construction Under discussion (Not fixed) CMI - Gen8 (60K) LGD - Gen8 (60+60K) BOE - Gen8 (60K) 8
Key Component Shortage Component Shortage LED BLU(LGP, LED Chip, Reflector...), Driver IC, Glass, POL... Factor Fast Demand Growth Lead to Shortages on Raw Material and Production Capacity Small-scale Productions on Various Products (Diversified Specs - Frame rate, BLU) Due to Worsened Cost Competition, Avoids Supply Diversified Product Lineup HD HD FHD HD HD CCFL 60Hz FHD LED 60Hz LED 120Hz 3D 240Hz CCFL 120Hz CCFL 3D 120Hz 9
BLU Key Components Supply Chain Component Shortage BLU Components Supply Chain Optical Component Film LGP Diffusion Plate Back Coating/Cutting Cutting/Polishing/Patterning Cutting Light Source CCFL (Ass y) BLU Maker LCM TFT-LCD Module LED Chip LED PKG LED Module Others (Tape, etc) Electric Components (Inverter, Driver, etc) Structures (Chassis, Mold Frame, etc) New Components for Edge Type LED LCD TV (Source : Light Guide Plate (LGP) for LED LCD TV 2010, Displaybank, Q1 10) 10
LGP Shortage Situation Component Shortage LGP Manufacturing Process & Shortage MMA PMMA Extrusion Sheet (Casting Sheet) Cutting/ Polishing Patterning (Printing/ Laser) BLU Maker Raw material stage Process stage Large size Companies Specialized to Chemical Area Small/Medium size Companies Specialized to Process Area Shortage and takes rather longer to ease the situation (Big investment amount and longer time to secure capacity) Shortage and takes rather shorter to ease situation (Rather smaller investment amount and rather shorter time to secure capacity) Serious Shortage Shortage (Source : Light Guide Plate (LGP) for LED LCD TV 2010, Displaybank, Q1 10) 11
LED Weather Forecast by Segment Component Shortage LED Weather Forecast by Segment Short-term Balance Long-term Balance Price Trend Remarks Ingot Substrate Shortage Shortage Shortage Shortage On a rise On a rise Ingot makers increasing capacity but takes time to catch up rising demand Despite no problem with the capacity, there is a shortage of ingot Wafer/Chip Balance Balance~oversupply On a fall Wafer and chip makers increasing capacity by adding rapid MOCVD reinforcement Package Balance Balance~oversupply On a fall Not enough growth engine except for large-size BLU Application Balance Balance On a fall Lighting market s growth is not fast enough Serious Not good situation OK Good situation (Source: LED Package Market & Industry Outlook Displaybank, Q2 10) 12
WW LED Packaging Demand Forecast Component Shortage Worldwide LED Packaging Demand, (Bil.Units) (Source: LED Package Market & Industry Outlook Displaybank, Q2 10) 13
Opportunities Opportunities Strong Demand for LED LCD TV 3D, New Criterion of Display Various Personal Mobile Application AMOLED, as post-tft LCD? 14
TV Mega Trend Transition LED & 3D TV Smart TV Network 3D TV Connected TV Ultra Slim LED BLU New Experience Flat Panel Display Larger Size Full HD Resolution Better Picture Quality Frame Rate 120Hz/240Hz Improve Response Time Better Picture Quality, Slim Design Save Energy (Green) (Source: 3D TV Industry Analysis and Market Forecast, Displaybank, Q2 10) 15
WW TV Market Forecasts LED & 3D TV Worldwide TV Market & GDP Forecast 166 176 184 192 197 201 207 227 242 255 267 277 Mil.Units (Source: Worldwide TV Shipment and Forecast, Displaybank, Q3'10 / World Economic Outlook, IMF, Jul. 2010) 16
Major TV Makers Business Plan in 2010 LED & 3D TV TV Business Plan by Major Brand (Mil.Units) 2009 2010 (Business Plan) LCD TV LCD TV LED LCD TV 3D TV LED LCD TV (%, in Max Case) Samsung 26.8 38 13 2.3 LG 16.3 28 6~7 1.0 Sony 15.1 23 6 2.3 23% 34% 26% Sharp 9.8 12 6 0.3 Philips 7.2 10 4~5 0.1~0.2 Toshiba 8.5 12 3~4 0.3 Panasonic 6.3 10 2~3 0.0 Vizio 5.9 8 3~4 0.5 Total 95.9 147 44~49 6.9 50% 45% 29% 25% 44% 31% 2009 2010 (Business Plan) Plasma TV Plasma TV 3D TV 3D Plasma TV (%, in Max Case) Panasonic 5.7 7.5 1.2 Samsung 3.5 4.4 0.3 LGE 3.1 4.0 0.1 6.8% 2.5% 15.6% (Source: LED LCD TV Makers Roadmap & Market Forecast, Displaybank, Q2'10) 17
TV Retail Price forecast (CCFL vs. LED) LED LCD TV 40 FHD LED TV (120Hz) VS CCFL TV (60Hz) Price Forecast (US$) 2,500 2,000 40 FHD LED TV (120Hz) x2.0 1,500 1,000 x1.8 x1.6 x1.5 Magic Price $1,000 ~ $1,500 500 40 FHD CCFL TV (60Hz) x1.3 0 2009 2010 2011 2012 (Source: FPD TV Cost Analysis & Forecast Report - LCD Module & TV, Displaybank, Q1 10) 18
LED LCD TV Market Forecast LED LCD TV LED LCD TV Market (Mil.Units) LED LCD TV Market (Bil.US$) CCFL LCD TV CCFL LCD TV LED LCD TV LED (%) 80% 209 LED LCD TV LED (%) 84% 113 120 56% 169 68% 101 63% 74% 130 74 50% 40% 85 28% 34 17% 31 3 2% 2009 2010 2011 2012 2013 2014 7 7% 2009 2010 2011 2012 2013 2014 (Source: Worldwide TV Shipment and Forecast, Displaybank, Q3'10) 19
3D TV Manufacturing Cost Comparison 3D TV 240Hz & 3D Premium Comparison 2D TV vs. 3D TV Cost Comparison 46 & 55 46 LED LCD 120Hz 46 LED LCD 240Hz Panel 100 113 TV Cost 100 112 Set 100 170 Product 46" LED LCD TV (Edge) 55" LED LCD TV (Edge) Frame rate 120Hz 240Hz 120Hz 240Hz 2D TV 3D TV 2D TV 3D TV LCD Module $645.0 $730.0 $895.0 $990.0 Tuner (Combo) $5.1 $5.1 $5.1 $5.1 Video Processor $19.5 $22.0 $19.5 $22.0 Audio Processor $6.5 $6.5 $8.1 $8.1 Other Circuit $81.8 $83.8 $110.4 $112.4 Circuit sum $112.8 $117.3 $143.1 $147.6 Mechanical sum $73.2 $80.5 $124.3 $134.4 etc. (CKD Pack+Tax+Freight+Loss+H/C) $117.9 $126.1 $144.6 $153.0 Material cost $948.8 $1,053.9 $1,306.9 $1,425.0 Manufacturing O/H $195.0 $231.0 $233.0 $272.0 Total Manufacturing Cost $1,143.8 $1,284.9 $1,539.9 $1,697.0 Additional Cost $141.1 $157.1 Retail Price $1,529.9 $2,599.9 $2,499.9 $3,499.9 (Source: FPD TV Cost Analysis & Forecast Report - LCD Module & TV, Displaybank, Q1 10) 20
3D TV Market Forecast 3D TV 3D TV Market (Mil.Units) 3D TV Market (Bil.US$) 2D TV 3D TV 3D (%) 2D TV 3D TV 3D (%) 54% 77 31% 84 59 23% 33 16 13% 0 6 7% 3% 0% 2009 2010 2011 2012 2013 2014 0 12 9% 28 17% 47 28% 67 43% 0% 2009 2010 2011 2012 2013 2014 (Source: 3D TV Industry Analysis and Market Forecast, Displaybank, Q3'10) 21
Personal Mobile Application Mobile Appl. 1200 1000 800 Smartphone Phone Market (Munits) (Mil.Units) e-reader E-Reader Market (Mil.Units) (Munits) 600 400 200 i-pad e-reader 0 2008 2009 2010 2011 2012 2013 2014 2015 Kindle2 (Source: Company Data, Displaybank Estimated, Q1 10) Sony Reader Kindle Mobile Phone + Design (Fold, Slide, Slim...) +Function (Camera, MP3, DMB...) Touch Smart Phone DSC, MP3, PMP, Car Navi... 22
Full Touch Phone: Resistive to Capacitive Mobile Appl. Resistive Capacitive TSP Market Forecast by Technology (Mil.Units) Samsung Omnia LG Cookie Apple iphone Google Nexus One Motorola Motoroi Samsung Galaxy HTC Desire LG Maxx Samsung Haptic Motorola ROKR LG New Chocolate Samsung Blue Earth LG Crystal (Source: Touchscreen Panel Market & Issue Analysis, Displaybank, Q1 10) 23
Why Capacitive? Pros and Cons Mobile Appl. Characteristics Comparison: Resistive Touch vs. Projected Capacitive Touch Resistive (Analog) Capacitive (Projected) Input Method Anything can push Finger Only Multi-touch No Yes Slim & Light Poor Excellent Life Span Poor Excellent Capacitive: Soft & Multi Transmittance Fair Very Good Stable Calibration No Yes Cost Low High Structure Comparison: Resistive Touch vs. Projected Capacitive Touch Capacitive: Need More infra and time for technology mature (Source: Touchscreen Panel Market & Issue Analysis, Displaybank, Q1 10) 24
AMOLED Investment Trend AMOLED (Mil.Units) S/M AMOLED Shipment SMD LGD - World Best AMOLED Panel Supplier - 2.1 Bil.US$ for 5.5G - 70K Substrates per month from Jul. 11-2H 10 : 4G with monthly CAPA of 4K sheet - 2H 11 : 250 Bil.Won to triple the capacity - Acquires IPs and Business of Eastman Kodak - AMOLED TV Launch : 15 (2009) 30 (2011) (Source : SMD) (Source : LGE) AUO (Source : AUO) - 3.5G LTPS Q3 10. - Acquire TMD Subsidiary, AFPD Secure 4.5G LTPS Line with 45K/Month Capacity - Consider 5.5G plant Construction Panasonic - Through its subsidiary, IPS-α, Consider Investing on 4~5G AMOLED Fab. (Source : AMOLED Investment Trend & Technical Issue, Displaybank, Q1 10) Sony - Under Large-size AMOLED TV, high possibility of investment to large-area Fab. over 3~4G 25
AMOLED Issues AMOLED Technical Issues for AMOLED (Source : Sony, UDC) (Source : Samsung) S/M AMOLED Present Issues Secure AMOLED Application Area (Smart Phone, NB PC, Tablet PC, etc.) Stabilized Panel Supply Secure Competing Edge Against LCD (Source : Samsung) Large AMOLED Size Enlarging Issues Improved Production Efficiency Secure Price Competitiveness Stabilized TFT Uniformity Secure large-area plating process Improved Life-time Secure Encapsulation Technology OLED Light Future AMOLED 3D OLED TV Applications Transparent OLED Flexible OLED 26
AMOLED Market Forecasts AMOLED AMOLED Shipment by Application AMOLED Revenue by Application (Mil.Units) (Mil. US$) (Source : AMOLED Investment Trend & Technical Issue, Displaybank, Q1 10) 27
Summary As challenges of current display industry, Displaybank points out undermined economy, unbalance of TFT LCD Panel supply & demand, overinvestment of TFT LCD, and shortages in Key Components. As opportunities of current display industry, Displaybank points out strong demand for LED LCD TV, 3D display, various personal mobile applications, and AMOLED. These opportunities enable constant growth of display industry despite the challenges like financial crisis. For example, the shipment of 2009 worldwide TV market rose 3.1% on year and is expected to rise 9.4%(YoY) in 2010. Display industry expected to make constant growth in the middle of IT convergence. And display industry needs to focus on developing next generation device as post-tft LCD. 28
Thank you! Jongchan Yoo Vice President Displaybank Co. Ltd., andy@displaybank.com URL : www.displaybank.com 29