OLED Pricing Seen Becoming ‘Very Competitive’ With LCD Next 2 Years

Average selling prices of OLED technology devices will become “very competitive with LCD” over the next 2-3 years, Barry Young, managing director of the OLED Association, said during a preview webcast for the group’s OLED Summit to be held in San Francisco Sept. 26-28. Capacity for small-medium OLED panels will grow from roughly a million square meters last year to 2 million square meters in 2012, Young said, and is expected to jump to more than 8 million square meters by 2016, as a result of new fabs announced by several market players.

The large-panel market is less clear, Young said, due to uncertainty over how fast companies can adopt the new technology and achieve cost efficiencies. The OLED Association predicts 4 million square meters of capacity for large-size panels by 2016, driven primarily by Samsung and LG, followed by AU Optronics, whose Gen 6 fab is expected to put out 32-inch TV panels rather than the 55-inch size coming from LG and Samsung, he said. Issues facing TV makers include adapting existing fabs for OLED production because “there’s not a lot of need for new fabs for TVs,” he said, and LCD TV volume is expected to decrease in 2012. “No new fabs” is the most cost-effective production solution but other issues remain, including the best method to manufacture a display. LG uses a white emitting layer with a color filter array for its OLED TVs and Samsung has taken an approach using RGB patterning, he said.

On reports about the expected $10,000-range pricing of OLED TVs coming out late this year from Samsung and LG, Young said they're being made “almost like prototypes.” For now OLED TV makers “don’t expect a lot of volume,” with early OLED TVs, “but it’s a good way to test the market and see what price level is acceptable.” When OLED TVs do hit the mainstream, he said, they could come in “10-20 percent less in cost” than LCDs. The timeline for that is at least 4 years out, Young said. The two fabrication methods currently being used by LG and Samsung require vacuum thermal deposition, an expensive process that would “cost more than what an LCD panel would cost,” he said. That problem will likely be solved with a printing technology but it will be a “couple of years” before one is available, he said. Converting a fab from LCD to OLED production would take another year, and testing and protocols would follow before OLED becomes competitive with LCD from a production cost standpoint, he said.

Young challenged media reports about high prices of OLEDs versus LCDs, in general, noting that in 2011 active-matrix OLED panels commanded a 21 percent price premium over LTPS (low-temperature polysilicon) LCD, but that the delta has dropped to 7 percent in 2012. Over the next 3-4 years, OLED costs will fall “significantly” and there could be a price premium of LTPS LCD over OLED. Young doubts that many OLED manufacturers would go under LTPS pricing, “but they certainly can match it,” he said. The lower cost structure for OLED’s isn’t hurting Samsung Mobile Display, he said, noting that the group is “making a profit” on the OLED side with small to medium panels, with margins above 10 percent, although it “lost on the LCD portion.”

Currently, Samsung dominates the small OLED space, and Samsung and LG are driving the mid-sized space, Young said. But there will be “a lot of new entrants” in 2012-2013 including AU Optronics and Chimei Innolux, and Japan Display -- comprising Sony, Toshiba and Hitachi -- will “likely” have OLED panels in 2013, he said. Panasonic and Sony’s partnership could produce TV products in 2013 or 2014, he said. A number of Chinese companies are developing Gen 4.5 OLEDs for LTPS and Gen 4.5 for LCDs. As they “get comfortable with low-temperature polysilicon, they would then switch over to OLEDs,” in 2013-2014, Young said.

A looming question for the OLED industry is what role Apple will play in it, if any. The OLED Association forecasts more than a billion displays being produced by 2017 in the small and medium segments and 8 million TVs with a revenue total of more than $9 billion. That’s without any contribution from Apple. “Apple has long history with OLEDs,” Young noted, citing the company’s work with Kodak in 2004-2005, but Kodak wasn’t able to get power consumption down and “Apple walked away.” Apple ended up going to LCD and in-plane switching technology for its retina display, but Young speculated that Apple’s partnership with Hon Hai and Hon Hai’s relationship with Sharp could yield OLED opportunities in the future as that technology becomes more prominent, since Apple wouldn’t want to rely on competitor Samsung for OLED displays.

Although in the past Sharp has said it favors LCD over OLED, the company’s financial losses could make it ripe for new panel technology options, Young maintained. He said, “We think Apple will serve as a source of OLED, and that is how Apple will move into the OLED industry without having to depend on Samsung.” Apple didn’t respond to our request for comment.