Tight AMOLED Supply Forcing Some Smartphone Suppliers to Return to LCDs

Tight supply of active-matrix OLEDs (AMOLEDs) is forcing some smartphone vendors to return to LCDs for the main display, as OLED producers scramble to keep up with demand, said industry officials and iSuppli.

The manufacturing shortfall is concentrated in AMOLEDs smaller than 4 inches, which are at the heart of Samsung and HTC smartphones. Samsung’s 3G-based quad band Galaxy S features a 4-inch AMOLED with 800x480 resolution, Qualcomm’s 1 GHz Sanpdragon processor and 5 GB of internal memory. It sold 200,000 units in Korea during its first 10 days of availability, Samsung said. The model was available Thursday on Amazon for $645. Meanwhile, HTC is said be switching to TFT-LCDs for some of its Desire and Droid Incredible ($599) smartphones that use a 3.7-inch display with 480x800 resolution and are sold through Verizon in the U.S.

The major reason for tight supply is that Samsung Mobile Display is the only volume producer of AMOLEDs for smartphones. Samsung Mobile’s factories in South Korea are operating at capacity, company officials have said. But the plants are expected to increase monthly production to 6 million to 8 million units of 3-inch displays from 2-3 million units (CED March 17 p1). Samsung also will add a 5.5G facility, but it won’t start production until 2012. LG Display, which bought OLED-related assets from Kodak, also is making AMOLEDs, but has concentrated 3.5G production on TVs. That includes a 15-inch AMOLED being sold in South Korea and Europe. AU Optronics is expected to restart AMOLED production after a four-year absence but isn’t expected to begin manufacturing 2- and 3-inch displays using 3.5-generation substrates until Q1 2011, company officials have said (CED May 26 p3).

Shipments of AMOLEDs under 9 inches are expected to hit 184.5 million units by 2014, up from 20 million in 2009 and 47.8 million this year, iSuppli said. Samsung projected that the OLED mobile display market will grow to 600 million units by 2015, up from 45 million units this year. Shipments of active-matrix LCDs will increase to 1.75 billion units from 1.3 billion, iSuppli said. “Rising demand, combined with a limited supply base, has led to the constrained availability of AMOLEDs,” said Vinita Jakhanwal, principal analyst for small and medium displays at iSuppli.

The tight supply is tied to demand for smartphones surpassing supplier forecasts, said Joseph Runde, associate director of the OLED Association trade group, which includes Samsung and LG as members. “One of the issues smartphone suppliers are confronting is that as sales grow they have to go back to their supply chain, which is ramping up per-market projections and all of a sudden is getting a call for more. I would say there isn’t a shortage, but rather a greater appetite for AMOLEDs than was originally anticipated.”