The price competition is intensifying between low-temperature polycrystalline silicon liquid crystal displays (LTPS LCDs) and rigid organic light emitting diodes (OLEDs) to attract middle- to low-priced smartphone markets. An LTPS LCD is prepared to drive out rigid OLEDs backed by price cuts thanks to the expansion of mass production capacities, while rigid OLEDs are in a mood to compete with a unit price cut strategy.
The LCD camp fired the first salvo. BOE, Tianma, AUO, and Foxconn expanded their 6G LTPS LCD plants and started operation in the second half of last year. As a result, their LTPS LCD production capacities increased 30 to 38%. Then supplies eclipsed demand for LTPS LCDs, pulling down LTPS LCD prices.
According to market researcher DSCC, the price of a 5.5-inch full HD LTPS LCD was US$27 in the second quarter. The dropped by about US$8 from US$ 35 last year. On the other hand, the price of a rigid OLED of the same size fell by US$5, less than that of the price of a 5.5-inch full HD LTPS LCD from US$39 last year to US$34 this year.
A fall in LTPS LCD prices put rigid OLED makers on alert in the second half of this year. Rigid OLEDs which mean flat screens lost ground to flexible OLEDs in the premium smartphone market. Rigid OLED makers attempted to expand to the mid- and low-priced smartphone market but as LTPS LCD companies stepped up the offensive with low prices, a need for rigid OLED makers to cope with it expanded. It is expected that rigid OLED prices will fall and be close to those of LTPS LCD in the second half of this year.
It is said that currently the supply prices of an LTPS LCD and a rigid OLED is about US$5 apart. OLEDs are more expensive. However, as rigid OLED production cost became close to LTPS LCD production cost, suppliers can strategically reduce OLED margins on suppliers' will, analysis says. This means that OLED makers will tackle LTPS LCD makers with an aggressive cut in prices.
In fact, a possibility of triggering price competition prompted Samsung Display, which manufactures OLEDs to predict a possible earnings decline at its second quarter earnings briefing.
As it is expected that demand for new smartphone models with 18:9 full screens instead of those with 16:9 screens will rise beginning in the second half of this year, the market of smartphones with 18:9 full screens will intensify, too. This will drive up demand for panels, cut back on price drops and may lead to a price rebound in the second half.
Market researcher Sigmaintel predicted that demand will rise to a point where some of LTPS LCD oversupply will be resolved in the fourth quarter. They analyzed that the popularity of full-screen smartphones may lead to a shortage of rigid OLEDs in the fourth quarter.
"If a factory operation rate falls, the production cost will increase. But it seems as competition intensifies, LTPS LCD makers have difficulty to such an extent that they stand a structure where they suffer from few margins or even loss," DSCC said. “For the time being, a glut of LTPS LCDs will continue."