According to data from iSuppli, the market research company, the shortage of active matrix organic light-emitting diodes (AMOLEDs) is hindering its dominant position in the smartphone market.
AMOLED is growing rapidly, and small-size AMOLED shipments for mobile phones and other applications are expected to reach 184.5 million in 2014, compared to 20.4 million in 2009, with a compound annual growth rate of 55.1% during the period. Although this growth is very impressive, it is still dwarfed by the small-size AMLCD shipments. The latter's 2014 shipments are expected to increase from 1.3 billion in 2009 to 1.75 billion.
Supplier is too single
Currently, Samsung Mobile Display (SMD) and LG Display are the only sources of AMOLED panels. SMD plans to invest $2.2 billion in its AMOLED plant to expand production by 2012. Currently, LG's shipments are limited, as its production has not yet increased. In addition to the two Korean manufacturers, Taiwan's AU Optronics and TPO Optoelectronics plan to launch AMOLED products in late 2010 or early 2011, but they are not currently shipping in large quantities.
Due to the small number of AMOLED suppliers, manufacturers of high-volume products such as mobile phones will naturally worry that if a certain device supply is delayed or completely stopped, production will be interrupted. In particular, companies like Samsung may have such a problem. Samsung has a special relationship with its own internal brands and will definitely be given priority when compared with external customers.
If the market demand for AMOLED is so strong, why do other manufacturers not build factories and start accelerating production? First, AMOLED is a relatively new technology compared to mature AMLCDs. The AMLCD factory is mature and almost fully depreciated. But the AMOLED factory only appeared in recent years, which makes AMLCD an advantage in terms of fixed costs. Second, the newer the technology, the more likely the manufacturing process will suffer yield loss, resulting in slower yield increases. Third, as AMLCDs improve performance and put pressure on display prices, competing with changing LCD performance and price targets is not only a challenge for new technologies such as AMOLEDs, but also delays the time for large-scale investments to pay off. .
South Korea plays an important role
As Samsung and LG are leading the way in developing AMOLEDs, the trends of the two companies will determine whether the technology can get rid of the current cramped status and qualify as a viable technology for mobile display.
In order to improve supply, Samsung is investing heavily in AMOLED, and plans to establish another 5.5-generation plant to be put into operation at the end of 2011. LG began construction of a new 4.5-generation plant that will produce both LTPS and AMOLED panels.
Mobile phone manufacturers are pushing AMOLED suppliers to achieve high volume production. In such a highly competitive market, emphasizing features and improved performance, AMOLED may provide manufacturers with the means they need to differentiate their products.
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