While LTPS LCD fab utilization continues to improve, DSCC believes this data points to lower priced phones selling better. LTPS LCD fab utilization is expected to rise from 76% in Q3’18 to 83% in Q4’18. By month, it hit 85% in October and November, which are expected to be the peak months of the year for LTPS LCD fab utilization.
In seasonally weaker December, fab utilization is expected to drop to 78%. By supplier for Q4’18 as shown below, Tianma is expected to lead at 96% followed by BOE at 93% which jumped from 68% in Q3’18 and overtook AUO for #2. Chinese suppliers are gaining share with CSOT rising to #3 in fab utilization at 88% vs. 82% in Q3’18. Thus, the top 3 companies for LTPS LCD fab utilization are all based in China.
There has been a lot of interest in Apple’s iPhone XR supply chain. JDI and LGD are the suppliers there and DSCC shows JDI’s fab utilization falling from 74% to 71%. At just their 6G fabs, it falls from 81% in Q3’18 to 75% in Q4’18. In LGD’s case, their fab utilization is actually improving from 56% in Q3’18 to 82% in Q4’18, thus, it appears they are benefiting from Apple’s latest launch and winning business at the expense of other Apple suppliers as their LTPS LCD fab utilization was just 68% in Q4’17.
In the case of OLEDs, the report shows that flexible OLED utilization is overtaking rigid OLED utilization in Q4’18 for the first time since Q4’17 which should be encouraging to the OLED supply chain. However, even the best quarter for flexible OLED utilization in 2018 is just 70%, which should result in slower mobile OLED capex in 2019.
By month, DSCC sees flexible fab utilization rising each month from 32% in April to 69% in October, falling slightly to 68% in November and rising to 71% in December.
In December, market leader Samsung is benefitting from the upcoming Galaxy S10 and foldable panel input as well as continued volumes for Apple. The all important and massive Samsung A3 fab is expected to reach 67% utilization in Q4’18, up from 61% in Q3’18 which will represent SDC’s overall average as well.
In Q4’18, the highest utilized OLED fab as shown below is actually expected to be BOE’s B7 which is expected to climb from 50% in Q3’18 to 89% in Q4’18 as its ramp finally gains momentum. Royole’s R1 fab is expected to be second at 83% although it is just starting its ramp to a small 4K. LGD should have the third highest utilization in Q4’18 as it finally begins shipping for Apple as well as growing volumes for the Google, Huawei and LG smartphones and the Apple Watch.
Rigid OLEDs are dominated by SDC with a 74% share of capacity in 2018. Its fab utilization improved from 52% in Q1’18 to 85% in Q3’18, but is expected to fall to just 67% in Q4’18 on weakness in China. Chinese smartphone demand has declined for 6 consecutive quarters Y/Y according to IDC. Brands can choose between LTPS LCD at the low end and flexible OLEDs at the high-end and there are multiple suppliers for each. However, in rigid OLEDs, SDC’s share is so dominant that some companies choose to go with multiple suppliers for LTPS LCDs rather than single source rigid OLEDs from SDC. Rigid OLEDs can also get squeezed by brands focusing on their high-end flexible OLED smartphones for margin and their LTPS LCD smartphones for volume.
DSCC – www.displaysupplychain.com