Li Yaqin, general manager of sigmaintell, was once again invited to attend the annual display industry event – Sid 2019 International Display Week, and delivered a forward-looking speech on the global panel Market “six trends forecast of global display industry development”.
The following is the full text of the speech:
The theme of my report today is about the prediction of several development characteristics of the global display industry in the future. I will summarize six aspects.
Trend 1: the output value of the global display industry will remain low in the next two years, and the industry looks forward to technological innovation
First, we will combine the changes of historical data to see our outlook on the output value and profitability of the whole display industry in the future. Combined with our survey data, we can see that the output value of the global display industry in 2018 was 108.2 billion US dollars, a decrease of 7% over the same period in 2017. This decline should be the largest in the past five years. If we look at the composition of this output value by technology, we can see that the gray part is a-Si TFT-LCD, and the output value has declined the most. In addition, in the part of new technology, its growth is obvious, but it is also slow. For example, what we particularly want to see is LTPS AMOLED, which is the technical output value of flexible and rigid AMOLED used in our mobile products. The penetration rate in 2018 increased by only one percentage point compared with that in 2017.
The yellow part accounts for a small proportion. AMOLED TV uses the oxide backplane. At present, it accounts for 2% of the output value of the whole industry, but it shows a significant growth. From the perspective of 2019, we expect that the penetration rate of AMOLED’s technical output value will continue to increase in the camp of the whole two blocks, but it is obvious that its growth rate does not reach the decline rate of a-Si TFT-LCD output value. Therefore, on the whole, the output value of the global display industry should be hovering at a low level in the next two years or so.
Therefore, we believe that under such a background, the global display industry should look forward to technological innovation. Through technological innovation, on the one hand, it is to improve the overall competitiveness, innovation and attraction to end consumers of display products. On the other hand, it can improve the unit price and added value, resist the risk of price decline and the impact on output value and profit.
Trend 2: capacity technology upgrading and elimination will become the driving force of industrial integration in the next three years
So if we pull the timeline to the whole historical range, what is the reason for the current situation? And what stage are we at in the long river of history? We have enlarged the whole time axis from the invention of display technology to the present time. It can be seen that the display technology has gone through three stages since it was commercialized in 1970.
The first stage is a start-up and small-scale commercial stage of display technology. In fact, CRT is the main display product in this stage. Then, the LCD display technology started small-scale mass production from sharp around the 1980s until the TFT-LCD display technology entered large-scale commercial mass production around 1990. So far, it should be said that at the peak of development and brilliance, it is between 2000 and 2020. During this period, the large-scale expansion of Japanese manufacturers, and the subsequent accession of South Korea, China Taiwan manufacturers and Chinese mainland manufacturers pushed the whole industry’s capacity and output value to a peak. In the past two or three decades, this technology has created many new market segments in many of its segments through continuous technological innovation and technological progress.
For example, through the upgrading of LCD types, from TN and STN to VA to IPS, we have improved the LCD response time and image quality, so that our LCD can use larger products. From the type of TFT backplane, from a-Si to LTPS to oxide, we can produce products with higher resolution, which is also a revolution in the resolution itself.
From the perspective of cost, from the mass production of generation 1 to generation 10.5, through the economic and large-scale production of larger generation lines, the cost of the same product can be reduced rapidly, which has promoted the penetration of the whole technology and the popularization of the end market. Therefore, from this point of view, the vitality of LCD technology is very strong, and the ability of self innovation and self-progress is also very strong.
At the same time, in the third stage, we can see that new technologies will also usher in vigorous development. On the one hand, it will replace LCD technology, on the other hand, it will create more application scenarios. Well, represented by OLED, EPD and micro led, these technologies are in the early germination and small-scale mass production stage, but it will take some time to replace LCD on a large scale.
In addition to the iterative development of the technology itself, we should also see the production capacity.
Here we show the growth of global display panel capacity in the past decade, which basically shows a phased peak. However, we all know that since 2015, LCD has been very popular in the global mainstream application market, so the growth rate of production capacity is relatively small. However, due to the capacity expansion of generation 10.5, the global display industry will face a relatively large capacity growth peak in 2018 and 2019, with the growth rate of capacity area reaching 10% and 11% respectively. After 2019, this growth rate will drop significantly from 2020. Therefore, in 2018 and 2019, global operators are expected to face greater challenges in terms of profits, one of which is that there is more competition from their own capacity expansion.
Then this process will inevitably involve the opening of new capacity and the elimination of old capacity. We can foresee that the global capacity of less than five generations is gradually withdrawing. Then, including generation 8, the production capacity of some relatively early depreciated generation 8 lines will gradually withdraw by upgrading LCD to other technologies. From the perspective of new technologies, OLED capacity is mainly built from generation 5.5 to generation 6, which is the red column on the right. Then, due to the new and expanded production of AMOLED TV in the 8th generation line and the expected new and expanded production of AMOLED in the 10th.5th generation line in the future, the output value and capacity of the whole AMOLED are also in a period of rapid expansion. Therefore, from the perspective of production capacity technology, this innovation is also very obvious. This is the second feature. The second feature will be very obvious for the technological innovation of mobile products, especially smart phones, in the whole terminal market.
This year, we expect that in terms of shipments, AMOLED, including rigid and flexible AMOLED, will have a penetration rate of 30%. Since 2021, due to the completion of the depreciation of the early AMOLED production line, we expect the penetration rate of the whole flexible AMOLED to accelerate. By 2023, the penetration rate of the whole flexible and rigid AMOLED technology in the whole smartphone market will be close to 50%, accounting for half of the country. This is the second feature we summarized.
Trend 3: products with larger size and higher resolution will become more and more mainstream in the market
Third, we can see that with the upgrading of capacity technology we just saw, products with larger size and higher resolution will become more and more mainstream in the market.
Here is a technical route of a large-size LCD display technology we drew. From the perspective of large-size, the next few years will focus on the technical progress and innovation of 8K, AMOLED and super large-size. 8K will become more and more popular with the development of 5g. Panel manufacturers also have a very positive 8K mass production plan this year. I can see that Samsung, Youda and sharp take the lead in mass production. At present, in terms of the layout of the product line, Samsung is the most complete and has a certain leadership. In addition, LGD, Taiwan panel factory and Chinese mainland panel factory also have a positive mass production plan. We expect that one or two products will be launched by the end of this year. In addition to the pull of panel technology and products, 8K has several more important constraints and pull, including TV SOC. At present, 8K TV SOC is not mature, which will restrict the amount of 8K TV this year to a certain extent. In addition, the maturity of content and 5g transmission network will also affect the mass production and growth of 8K. We expect that due to the above factors, the global 8K penetration rate is still very low this year, with a scale of about 200000 units. 2020 is also in an accumulation period. We expect a rapid increase from the end of 2021 to 2022.
Well, another aspect is the large size. As we all know, the 10.5 generation wire is more economical, and the cutting is 65 inches and 75 inches. Well, because of the large-scale production capacity of these sizes, 65 inches has quickly become a more common and affordable product. For example, in the Chinese market, the promotional price of 65 inches can be sold for about 3000 yuan; In the North American market, during the promotion period, the average price of 65 inches can also be sold for $450-550. So in such a 65 inch large-scale penetration and price reduction trend, the layout of the super large market has become very important for many brands.
We can see that with the price decline of 75 inches, 86 inches and 82 inches will also win a certain market share this year. It is a predictable trend for more panel factories to allocate more capacity to oversize.
On the whole, the market above 65 inches is still in a market with relatively small scale and insufficient competition. For many panel factories and complete machine manufacturers, it is a profitable or profitable high value-added product and market, which is worth cultivating. We believe that with the trend of large-scale and the penetration of 8K products, the competition pattern of this market and its scale will show a lot of variability in the future.
Trend 4: the traditional liquid crystal cycle law is broken, and it is important to control the production capacity
The fourth feature, we believe, is that the panel industry has a liquid crystal cycle lasting for decades, which presents regular fluctuations. From the historical experience, that is, every 12 and 24 months, there will be a price peak and trough, which we call the liquid crystal cycle. However, from 2018, we can observe that the cycle of liquid crystal cycle is being broken. The price rise in 2018 lasted only three months. It shows that with the change of production capacity and market competition pattern, the fluctuation cycle of the whole market is shortening and the degree of fluctuation is increasing. From the perspective of supply-demand relationship, we can see that the supply-demand fluctuation of the whole market is very significant.
From the perspective of this year, the first half of this year is in a stage of oversupply, especially in the second quarter, it reached 8.2%. How to reduce or alleviate this oversupply? We believe that the oversupply in the second quarter will damage the profits of the panel factory. Therefore, with such a large capacity growth, we suggest to control the capacity, which will become more and more important.
According to our supply-demand model, if the panel manufacturers do not adjust the production rate, the supply-demand ratio of the whole TV panel in the second quarter is 8.2%. According to our calculation, if the panel manufacturer can lower the production capacity by 7%, the whole market supply-demand ratio will return to a healthy level, about 5%. Therefore, the phased control and adjustment of production capacity will help ease the pressure of oversupply and profit, which is also a suggestion for the industry.
Trend 5: off screen fingerprint and off screen camera technology promote the integration of display panel and sensor technology
Fifth, we can see that in the field of smart phones, due to the continuous deepening of the comprehensive screen and the fact that the design tends to be more towards the real comprehensive screen, the integration between the display panel technology and the sensor technology has become more and more obvious. Especially through our smart phone technology roadmap, we can see that FOD and UDC are beginning to enter a large-scale mass production. FOD is the off screen fingerprint and UDC is the off screen camera. Then, around the off-screen fingerprint, AMOLED off-screen fingerprint has achieved mass production and matched with the on-board volume of flagship models of various brands. LCD off-screen fingerprint is also under development. It is expected to have the opportunity to usher in mass production by the end of this year. Then, for the off-screen camera, we expect that it is also likely to usher in mass production in 2020.
We know that the full screen mobile phone can be called another innovation of the smart phone screen. It has taken place from 2017 to 2018-2019, which is a period of continuous improvement of the full screen. It is expected that by 2020, with the mass production of off screen fingerprints and off screen cameras, the screen of the whole smart phone will tend to be a real full screen.
For the mass production of FOD and UDC, we can see that its value chain is very strong. The middle covers semiconductor manufacturers, sensor manufacturers and panel manufacturers. Therefore, the in-depth cooperative development between panel manufacturers and sensor manufacturers will have a far-reaching impact on the development of smart phone industry chain.
In addition to FOD, the off-screen camera I just mentioned, as well as the body sensor and the RF sensor after 5g mass production, may be integrated with the screen and implanted below or inside the screen in the future.
Trend 6: 5g will promote the decisive growth of smart phones, 8K TV and innovative applications from 2021 to 2022
We have just mentioned 5g many times in the previous part. 5g will form a revolutionary promotion and impact on the display industry.
We can use 4G as a reference to predict 5g. 4G became commercially available in China in 2012, making China’s smartphone market flourish from 2013 to 2015. Both foreign brands and Chinese brands have accelerated the release of 4G mobile phones, which has also brought waves of innovation in screen technology and chip technology.
As for the commercial use of 5g, 5g has been commercially available in the United States, South Korea and some European countries since the end of 2018, and China will also start the trial commercial use of 5g in large and medium-sized cities by the end of 2019. Chip manufacturers and SOC manufacturers also develop new products around 5g, and mass production will be realized in the second half of 2019. In terms of smart phones, we believe that 2020 is the stage of mass production of products. Starting from 2021, the global shipment will exceed 400 million units, and the shipment will exceed 1 billion units by 2023, occupying the absolute mainstream of the smart phone market. This is mainly related to the construction of 5g base station and the decline rate of chip cost. The explosive growth of 5g smart phones will be of great help to promote the growth of AMOLED in the next three or four years, because the high transmission frequency of 5g will put forward higher requirements for the mobile phone screen. The biggest requirement is in terms of power consumption. If the power consumption on the screen is reduced, it is bound to be welcomed by terminal manufacturers and consumers, and AMOLED has obvious advantages in this regard.
From the perspective of large-scale market, the improvement of content transmission speed by 5g will mainly promote the vigorous development of 8K intelligent devices. On the basis of 5g, 8K’s own industrial chain, including 8K SOC, the decline of panel cost and the improvement of oversize penetration, is expected to increase significantly from 2022, and the global shipment scale will reach 11 million units by 2023, mainly focusing on the oversize market of 65 inches and above.
In addition, 5g, artificial intelligence technology and larger human-computer interaction will bring greater expansion to the whole commercial display and smart home application scenarios. We can see that many governments and large enterprises have put forward self innovation plans based on 5g, mainly focusing on changes in all aspects of life such as intelligent transportation, intelligent medical treatment and intelligent education. Based on this, it will lead to the technical upgrading of many applications and devices, including CMOS sensors, DRAM storage, AI machine vision, 4K and 8K displays, and biometrics.
Therefore, another promotion of 5g is innovative applications. The first is the large screen. When so many generation 10.5 lines are launched, in the global market of more than 65 inches, the innovative application we see is the interactive electronic white board (IWB), whose penetration rate has reached 10%. In 2018, the overall market penetration rate did not increase significantly. By 2019, we predict that the penetration rate will decline. The main reason is that although the demand is growing, the growth rate of demand can not catch up with the growth rate of supply, so its overall penetration rate will decline. Well, with the development of 5g, we expect the penetration rate to increase to 15% by 2022, of which 50% to 60% are from the demand of the Chinese market. The scale of LCD IWB in the Chinese market has exceeded 1 million. Its application scenarios include not only traditional classrooms, but also conference rooms of large, medium and small enterprises for intelligent meetings, but also intelligent education application scenarios such as education market, preschool education and training institutions.
In addition, in the mobile market, driven by smart cars, new retail and industrial intelligence, the market scale of mobile innovative applications such as on-board display, industrial control medical treatment and mobile payment devices will grow at a rate of about 30% per year. Therefore, from the perspective of 5g, our overall view is that in 2021 and 2022, mobile display finished products and large-size products will bring a wave of new technology updates and product updates respectively. The 5g’s pull on innovative applications will take off from 2022, which we think is continuous and huge.