Continuous Capacity Expansion of Small and Medium-Sized AMOLED May Lead to Oversupply

The global production capacity of small- and medium-sized AMOLED panels continues to expand, and will reach 13.6 million m2 by 2018, an increase of 51.1% compared with the previous year, says WitsView, a division of TrendForce. As Chinese panel makers continue to release new capacity, the global capacity of small- and medium-sized AMOLED panels may double to 27.3 million m2 in 2021.

“AMOLED panels have become the focus of market after the adoption of iPhone”, says Boyce Fan, Research Director of WitsView. This market trend has most benefited Samsung Display (SDC), which has an absolute edge over its rivals in productivity and technology of AMOLED panels. However, as the mobile phone market entered the off-season in 1Q18, the demand for AMOLED panels began to drop substantially, which in turn lowered SDC's utilization rate of its production lines. As the result, SDC has actively adjusted its pricing strategy to reduce the price differences between AMOLED panels and LTPS panels, improving the utilization rate of production lines. However, the demand for mobile phone panels appears to hugely different between peak-season and off-season, the customer base is too concentrated as well, SDC decided to postpone the plan to invest the new Gen 6 fab.

Chinese panel makers continue to release new capacity, and will contribute to 37% of the global capacity in 2021

Chinese panel makers’ investment in new AMOLED panel capacity is on the rise, due to the high demand for AMOLED panels from branded Chinese manufacturers coupled with the government's supporting policy. For example, BOE’s first Gen 6 fab of flexible AMOLED panel has entered mass production in Chengdu at the end of 2017. Tianma and Visionox also expect the mass production of flexible AMOLED panel in their Gen 6 fabs in 2018. In the next few years, both Everdisplay Optronics (EDO) and China Star Optoelectronics Technology (CSOT) have also put forward plans for AMOLED panel production. It is estimated that the production capacity of small- and medium-sized AMOLED panels in China will contribute to 37% of the global capacity in 2021, up from 16% in 2018. Meanwhile, the proportion of capacity in South Korea will be 53% in 2021, down from 81% in 2018.

The market may see oversupply, notebook and automotive applications may help consume the capacity

The continuous investment in AMOLED panels may lead to oversupply in the market. Even the market leader SDC may have to strike a balance between consuming capacity and making profits. WitsView notes that the production capacity of rigid AMOLED panels has become stable with few possibility of large-scale expansion, and mobile phones have been the main application to consume current capacity. In this situation, the market will next explore new applications of rigid AMOLED panels in the notebook and automotive fields.

As for the currently expanding capacity of flexible AMOLED panels, the market situation will depend on when foldable AMOLED mobile phones can come out. Foldable AMOLED mobile phones will not only bring innovations to the smartphone market, but also help panel makers consume considerable production capacity because screens of foldable mobile phones will be twice as large as traditional ones.