July 31, 2017: According to market research firm IHS Markit estimate, flexible active matrix organic light emitting diode (AMOLED) capacity will expand from 1.5 million sq m to 20.1 million sq m between 2016 and 2020, at a compound annual growth rate of 91 percent.
In 2016, flexible capacity, or facilities with the capacity to produce AMOLEDs on plastic substrates, accounted for just 28% of the total capacity, as it targetted only mobile applications. This will increase to 80% by 2020 as almost every new Gen 6 fab and smaller facility developed in the next four years will produce flexible AMOLED, according to the IHS Markit’s Display Supply Demand & Equipment Tracker report.
IHS Markit expects China, Japan and South Korea to develop equivalent of 46 new flexible AMOLED fabs by 2020, and these facilities will have a monthly capacity of about 30,000 substrates, each. These fabs will add production capability of 18.6 million sq m of new plastic substrate, more than 13 times the industry’s current level.
“The new capacity will facilitate an increase in flexible AMOLED panel adoption in smartphones,” states Charles Annis, senior director, IHS Markit. “Nevertheless, as so much new flexible capacity is being added, it is starting to raise concerns that the market will not be able to absorb all of the potential output,” he adds.
IHS Markit also predicts that due to less AMOLED panel supply in 2016, it lead to a growing capacity-based glut. The supply is forcast to exceed demand by more than 45% in 2020, when 40% of smartphones will adopt AMOLED panels.
“AMOLED displays will offer excellent image quality and form factor advantages in high-end phones. Despite excessive capacity availability, the challenge to faster adoption will be costs,” Annis said.
High manufacturing costs for the manufacturers will keep average rigid AMOLED panel prices 40% above equivalent LCD panels, while flexible AMOLED panel prices will remain 100% higher. “Smartphone makers, targeting mid and low-end market segments, may want to buy flexible AMOLED panels, but are likely to be restricted by lingering high prices.”
The growth of flexible AMOLED capacity and the resulting increase in panel production will help to reduce costs, increase yields and improve quality. In the years to come, adoptions will spur. However, the industry will need to resolve many challenges that will come in the coming years.
IHS Markit – www.ihsmarkit.com