Spending on flat panel display equipment is set to reach to $11.2 Billion in 2016, and $11.6 billion in 2017, its highest level in five years says research firm IHS.
The analyst says that driving this growth are two trends: in South Korea there is a rush to expand capacity to produce high volumes of flexible active-matrix organic light-emitting diode (AMOLED) panels for smartphone applications; while in China, panel-makers are continuing to build new factories to produce a varied portfolio of flat panel display technologies and panel sizes.
The latter will give a huge boost to mobile video, especially as 4KTV applications come to smartphones. Compared with LCD, AMOLED displays offer advantages in colour gamut, viewing angle, switching time and crucially power consumption. Yet their progress has to date been held back by affordability.
IHS believes that now that Samsung Display has made rigid AMOLED displays highly cost competitive with LCD, and that many leading smartphone brands are showing strong interest in adopting the technology. It expects both glass- and plastic-based AMOLED displays to rapidly gain market share in the high-end smartphone market. IHS adds that the flat panel display supply chain is reacting to this technology shift, adding enough capacity to produce more than 300 million additional flexible AMOLEDs per year by 2018.
Based on data from its latest Display Supply Demand & Equipment Tracker, IHS predicts that 60% of 2016 equipment spending will be used to build LCD-dedicated fabs and 405 will be invested in AMOLED or AMOLED-LCD dual use facilities. By 2017 the ratio of LCD to AMOLED fabs will reach parity. China is forecast to account for about 70% of total equipment spending in 2016 and 2017, and South Korea will account for most of the remainder.
“Thanks to direct investments, technology subsidies, low interest-rate loans, tax exemptions and other government-sponsored support mechanisms, ten different companies will be building 15 new factories in China over the next two years,” commented Charles Annis, senior director at IHS Technology. “Chinese FPD producers are targeting panel self-sufficiency for the country’s enormous consumer electronics industry.”
Yet despite the general optimism, the analyst had concerns that at this point in the market cycle the display industry may be slow to rationalise itself. “Chinese Government policies insulate Chinese panel makers from some financial concerns and investment in flexible AMOLED is not really related to the supply-and-demand issues, Annis added. “If this slow rationalisation depresses panel maker profitability much longer, it eventually will negatively affect not only panel makers, but their suppliers as well.”